Exercise 13-17: Ski Jackets
Inputs High end Mid range Low end
Expected demand, D600 1,000 2,000
Standard deviation of demand, σD400 500 600
Unit costs, C$120 $100 $70
Sales price, p$300 $200 $110
Discount price $0 $0 $0
Inventory holding costs for season $0 $0 $0
Salvage value, s$100 $85 $50
Cost of understocking, Cu$180 $100 $40
Cost of overstocking, Co$20 $15 $20
Outputs
Optimal cycle service level, CSL 0.9000 0.8696 0.6667 Total
Optimal order quantity 1,113 1,562 2,258 4,933
Expected profits $93,960 $87,808 $66,910 $248,679
Expected overstock 532 595 390 1,517
CR – 12/3/2020 10:04 AM Page 1 13-17.xlsx – 13.17a
Exercise 13-17: Ski Jackets
Inputs High end Mid range Low end
Expected demand, D600 1,000 2,000
Standard deviation of demand, σD400 500 600
Unit costs, C$120 $100 $70
Sales price, p$300 $200 $110
Discount price $0 $0 $0
Inventory holding costs for season $0 $0 $0
Salvage value, s$100 $85 $50
Cost of understocking, Cu$180 $100 $40
Cost of overstocking, Co$20 $15 $20
Outputs Total
Order quantity 600 1,000 2,000 3,600
Cycle service level, CSL 0.5000 0.5000 0.5000
Expected profits $76,085 $77,061 $65,638 $218,784
Expected overstock 160 199 239 598
CR – 12/3/2020 10:04 AM Page 2 13-17.xlsx – 13.17b
Exercise 13-17: Ski Jackets
Inputs High end Mid range Low end
Expected demand, D600 1,000 2,000
Standard deviation of demand, σD400 500 600
Unit costs, C$120 $100 $70
Sales price, p$300 $200 $110
Discount price $0 $0 $0
Inventory holding costs for season $0 $0 $0
Salvage value, s$100 $85 $50
Cost of understocking, Cu$180 $100 $40
Cost of overstocking, Co$20 $15 $20
With Capacity Constraints (Specified order)
Cycle service level, CSL 0.5000 0.5000 0.5000 Total
Order quantity 600 1,000 2,000 3,600
Expected profits $76,085 $77,061 $65,638 $218,784
Expected overstock 160 199 239 598
With Capacity Constraints (Optimal Order)
Optimal order quantity 890 1,174 1,536 3,600
Optimal order quantities
Cycle Service Level, CSL 0.766 0.636 0.219
Expected profits 91,248$ 83,087$ 56,896$ $231,232
Expected overstock 345 299 76 719
CR – 12/3/2020 10:04 AM Page 3 13-17.xlsx – 13.17c