How would the order quantity change

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Reference no: EM13222634

1. For each parka Obermeyer faces the situation of possibly producing too much or too little compared to actual demand.

Obermeyer has to place its first production order in November (about 9 to 10 months before the end-customer start buying the collection). Assume that Obermeyer could not place another order at a later point in time and disregard any minimum order quantities.

a. How many parkas of each style should Obermeyer order were available? Use the newsboy/newsvendor model (both terms are used for the same model) for your calculation.

b. How would the order quantity change if the loss for each unsold parka would not be 8%, but 46% in the above scenario?

2. Which assumptions of the newsboy model correspond to the real situation described in the case; which do deviate strongly?

Reference no: EM13222634

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