Question

In preparing for the upcoming holiday season, Fresh Toy Company (FTC) designed a new doll called The Dougie that teaches children how to dance. The fixed cost to produce the doll is $100,000. The variable cost, which includes material, labor, and shipping costs, is $34 per doll. During the holiday selling season, FTC will sell the dolls for $42 each. If FTC overproduces the dolls, the excess dolls will be sold in January through a distributor who has agreed to pay FTC $10 per doll. Demand for new toys during the holiday selling season is extremely uncertain. Forecasts are for expected sales of 60,000 dolls with a standard deviation of 15,000. The normal probability distribution is assumed to be a good description of the demand. FTC has tentatively decided to produce 60,000 units (the same as average demand), but it wants to conduct an analysis regarding this production quantity before finalizing the decision.

1. Create a what-if spreadsheet model using a formula that relate the values of production quantity, demand, sales, revenue from sales, amount of surplus, revenue from sales of surplus, total cost, and net profit. What is the profit corresponding to average demand (60,000 units)?

2. Modeling demand as a normal random variable with a mean of 60,000 and a standard deviation of 15,000, simulate the sales of the Dougie doll using a production quantity of 60,000 units. What is the estimate of the average profit associated with the production quantity of 60,000 dolls? Round your answer to the nearest dollar.

Answer 1

1)SOLUTION

a) Worksheet to simulate the sales of the Freddy doll using the production quantity of 60,000 units First enter the data andrell Toy Compan Fixed Production Cost$100,000 S34 $42 S10 Unit Variable Cost Unit Selling Price Unit Surplus Price Production Quan 60,000 Demand Normal Distribution Mean Standard Deviation 60,000 15,000 Simulation Trials Net Sales Revenue Surplus Total Surplus Revenue Trial Demand Sales Cost Profit The cell formulas for the simulations trials are as follows The cell under Trial Enter 1 for the first simulation trial Simulate th demand (normal distribution) using the NORMINV and RAND functions The minimum of demand and production quantit Multiply sales by the unit selling pric The surplus of the production quantity over the demand Multiply the surplus by the unit surplus The cell under Demand The cell under Sales The cell under Sales Revenu The cell under Surplus The cell under Surplus Revenue The cell under Total Cost The cell under Net Profit nce The fixed cost plus the variable cost The sales revenue plus the surplus revenue minus the total cost

Answer 2

dear student, please refer to the question: https://www.homeworklib.com/question_808729_statistics-or-probability