Determine the optimal number of skip gunther series jackson

Assignment Help Operation Management

Reference no: EM13388656

Jackson Mint produces collectible plates. It has recently contracted with the estate of well-known artist, Skip Gunther, to produce a series of five commemorative plates bearing copies of the artist's most famous pictures. The plates will be sold by subscription at a cost of $300 plus shipping and handling for the entire five-plate series. Jackson estimates the cost of producing each plate in the series at $12.50 plus a $9.75 royalty that Jackson has agreed to pay the Gunther estate.

Jackson intends to mount a $175,000 nationwide advertising campaign promoting these plates as a "limited edition"; that is,Jackson "'ill specify the number of plates it will produce and limit production to that amount. Any unsold plates will be destroyed. Based on its previous experience with such products, Jackson estimates that customer demand for the series will be approximately normally distributed, with a mean of 1800 and a standard deviation of 250.

If Jackson has more subscribers than plate it will refund subscribers' money with a note explaining that the series has been over subscribed. Reasoning that the unsatisfied customers will be more willing to subscribe to Jackson's future offerings, it estimates that each unsatisfied customer will earn the company an average of $40 in discounted future profits.

a. What is the optimal number of Skip Gunther series Jackson should produce?

b. What expected profit or loss will Jackson earn if it follows the production policy found in part (a)?

Reference no: EM13388656

Questions Cloud

Bender guitar corporation a manufacturer of custom electric : bender guitar corporation a manufacturer of custom electric guitars is contemplating a 1000000 investment in a new

Explain ethical issues or concerns about mcos providing : you are a new physician setting up your own practice in a new town. you are researching the different mcos offered in

What are the trends or similarities between countries with : the corruption perceptions index cpi is a comparative assessment of integrity performance for a variety of

How this investment give rise to subsequent opportunistic : some products require special custom-made trucks to transport by road. if a trucking company contracts with a

Determine the optimal number of skip gunther series jackson : jackson mint produces collectible plates. it has recently contracted with the estate of well-known artist skip gunther

List and briefly explain four of the five differences : list and briefly describe four of the five differences between managerial accounting and financial

Determine the optimal production batch size and the length : bees candy manufactures a variety of candy bars in a number of different sizes. one of its more popular products is the

Budgeted machine hours are 105000 hours and budgeted labor : thibodeaux limousine corporation is trying to determine a predetermined manufacturing overhead. estimated overhead for

Identify at least two other competitors in the same : write a 750- to 1000-word paper in which you identify your favorite brand and explain why it is your favorite. in the

User Account

All Pages