How many sweatshirts would you recommend ba order

Reference no: EM133335811

Case: The Baltimore based company Beyond Armor (BA) is exploring a new business opportunity: selling custom screen-printed sweatshirts for college football bowl games. BA is trying to determine how many sweatshirts to produce for the upcoming Tangerine Bowl game. During the month before the game, BA plans to sell their sweatshirts for $30 each. At this price, they believe the demand for sweatshirts will be uniformly distributed between 5,000 and 15,000.

One month after the game, BA plans to sell any remaining sweatshirts to the local TJ Maxx and Marshalls outlets for $12 each. At this price, BA believes they will be able to sell either 500 units with probability 30%, or 750 units with probability 40% or 1000 units with probability 30%.

Any remaining sweatshirts will be donated to a local charity.

BA can order custom screen-printed sweatshirts for $10 per sweatshirt in lot sizes of 200. Use simulation modeling to answer the following questions.

Question: How many sweatshirts would you recommend BA order to maximize expected profit?

Due to an outbreak of a novel infectious disease, Governor Hogan has announced that there is a 50% chance that all sport events will now be held without a live audience. If that happens, you will not be able to sell any sweatshirts for $30, and instead will only be able to sell to TJ Maxx and Marshalls, (in the same quantity as in the original problem formulation). How many sweatshirts would you recommend BA order to maximize average profit? Is the venture still profitable?

Reference no: EM133335811

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