The warehouse before the growing season

Assignment Help Operation Management

Reference no: EM132255774

Monsanto sells genetically modified seed to farmers. It needs to decide how much seed to put into a warehouse to serve demand for the next growing season. It will make one quantity decision. It costs Montanso $8 to make each kilogram (kg) of seed. It sells each kg for $45. If it has more seed than demanded by the local farmers, the remaining seed is sent overseas. Unfortunately, it only earns $3 per kg from the overseas market (but this is better than destroying the seed because it cannot be stored until next year). If demand exceeds its quantity, then the sales are lost—the farmers go to another supplier. As a forecast for demand, it will use a normal distribution with a mean of 300,000 and a standard deviation of 100,000.

A. How many kilograms should it place in the warehouse before the growing season?

B. If it puts 400,000 kg in the warehouse, what is their expected revenue (include both domestic revenue and overseas revenue)?

C. How many kilograms should it place in the warehouse if it wants to minimize its inventory while ensuring that the stockout probability is no greater than 10 percent?

D. What is the maximum profit for this seed?

Reference no: EM132255774

Questions Cloud

Develop the minimum cost plan and compute its total cost : Develop the minimum cost plan and compute its total cost. Hint: Hire 8 new workers and meet any shortages with overtime.

Expectation that employee will perform particular job : When a manager has an expectation that an employee will perform a particular job, as well as the right to take corrective action if the employee does not do so,

Type of organizational structure that they use to implement : Why is it important for managers to carefully consider the type of organizational structure that they use to implement their strategies?

American apparel drives from vertical integration strategy : What are the most important strategic benefits that American apparel drives from its vertical integration strategy?

The warehouse before the growing season : How many kilograms should it place in the warehouse before the growing season?

Customer satisfaction improvement program : A customer relationship manager decided to track customer complaints as part of his ongoing customer satisfaction improvement program

How do companies handle competitive bidding activities : How do companies handle competitive bidding activities when the statement of work in the proposal is vague?

Defined as a product that sells less than half of forecast : What is the probability this parka turns out to be a “dog,” defined as a product that sells less than half of the forecast?

Address shareholder challenges to sustainability practices : How should corporations address shareholder challenges to sustainability practices that might reduce current profitability?

User Account

All Pages