Reference no: EM132071388

Swell Productions is sponsoring an outdoor conclave, a one-day event, for owners of collectable Fords. The concession stand in the T-Bird area will sell T-shirts, poodle skirts, and other souvenirs of the 1950s. Poodle skirts are purchased before the event from Peachy Keen, Inc., for $40 each and are sold during the event for $75 each. If any skirts are left over, they can be returned to Peachy for a refund of $33 each. The forecasted demand for skirts has Normal distribution with a mean value of 400 units and standard deviation of 50 units. The question is how many units of the skirts should be purchased before the event.

a). Assume that all unsatisfied demand during the event will be lost, how many Poodle skirts should Swell order from Peachy Keen for this one-time event?

b). Now, assume that all the unsatisfied customers during the event are willing to be backlogged. At the end of the event, Swell will then put a rush order just enough to satisfy all those backlogged customers. But, for this rush order, Peachy Keen will charge $65 per unit, instead the $40 per unit. How many Poodle skirts should Swell order before the event? (Note Swell will sell to the backlogged customers for the same price of $75.)