What is probability that they will run out of raw material

Assignment Help Operation Management

Reference no: EM132140095

Goop Inc needs to order a raw material to make a special polymer. The demand for the polymer is forecasted to be normally distributed with a mean of 250 gallons and a standard deviation of 125 gallons. Goop sells the polymer for $25 per gallon. Goop’s purchases raw material for $10 per gallon and Goop must spend $5 per gallon to dispose off all unused raw material due to government regulations. (One gallon of raw material yields one gallon of polymer.) If demand is more than Goop can make, then Goop sells only what they made and the rest of demand is lost.

a. Suppose Good purchases 150 gallons of raw material. What is the probability that they will run out of raw material?

b. Suppose Goop wants to ensure that there is a 92% probability that they will be able to satisfy the customer’s entire demand. How many gallons of the raw material should they purchase?

c. How many gallons should Goop purchase to maximize its expected profit?

Reference no: EM132140095

Questions Cloud

Organization become big data ready-mature and visionary : How can an organization become big data ready, mature, and visionary?

Organization performance management system : Discuss your organization’s performance management system (PMS) or the PMS of an organization with which you are familiar.

Develop demographic profile of consumers : Develop a demographic profile of consumers you think are most likely to purchase this product.

Company mode of entry into foreign markets : Analyze and determine your company’s mode of entry into foreign markets.

What is probability that they will run out of raw material : Suppose Good purchases 150 gallons of raw material. What is the probability that they will run out of raw material?

Recent amendments to the family and medical leave act : Discuss the recent amendments to the Family and Medical Leave Act. How will these changes help veterans who are disabled or wounded?

Evaluate how ethical your company global operations : Critically and objectively evaluate how ethical your company’s global operations are and determine if they are good corporate citizens

Does your company have exit strategy : Does your company have an exit strategy? Recall that exit strategies are to be determined before entry into the foreign market rather than after entry.

Do any of you collect data at work : Do any of you collect data at work? How can you best take raw data and ensure that it becomes useful information?

User Account

All Pages