Calculate the profit maximizing order quantities for each

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Reference no: EM132221056

Case (Le Club Français du Vin) Assignment

Instructions:

In groups, prepare a thorough analysis and answer the questions below using (all) the information contained in the case and pertinent material from our class. Feel free to make some assumptions but only if they do not contradict with the information in the case. If there is no sufficient data for an item to be included in your calculations, you can ignore it. Do not hesitate to consult with me for guidance.

Questions:

1. Draw a Forecast vs Actual demand for the Le Club Français du Vin data from the previous year, similar to one in Figure 12.3 in the Newsvendor Model chapter on LMS. What does the graph tell you about the firm's forecasting accuracy?

2. Compute the Forecast and Actual ratios using previous year's data, and use them to calculate the mean and standard deviation of expected demand for the current year's products.

3. Determine the critical ratios for current year's products and use them to calculate the profit maximizing order quantities for each.

mportant:The case does not state information for Rosé or carton panachéwines. Please take all information for white wines to be also valid for these other items. Effectively, all information is to be categorized as "for red" and "for non-red" wines.

mportant: Please change the warehousing cost given in the case from "0.10 Euro per month per bottle" to "%12 of the cost per bottle per year"

Important:The case gives the average warehousing duration for the wines but does not specifically state the average time to sale. Please take the average time to sale as half of the average warehousing duration.

4. Calculate the usual expected performance measures for each current year's product as a result of the order quantities calculated above: expected lost sales, expected sales, expected leftover inventory, and expected net profit.

5. Looking back at the critical ratios and resulting optimal order quantities you calculated, criticize them considering their implications and comment on what other criteria/approach you would use to decide on the order quantities (instead of, or along with the critical ratio (Newsvendor method) approach.

Reference no: EM132221056

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