Purpose of Assignment

The purpose of this assignment is for students to learn how to make managerial decisions using a case study on Normal Distribution. This case uses concepts from Weeks 1 and 2. It provides students an opportunity to perform sensitivity analysis and make a decision while providing their own rationale. This assignment also shows students that statistics is rarely used by itself. It shows tight integration of statistics with product management.

Assignment Steps

Resources: Microsoft ExcelÂ®, SuperFun Toys Case Study, SuperFun Toys Case Study Data Set

Review the SuperFun Toys Case Study and Data Set.

Develop a 1,050-word case study analysis including the following:

Use the sales forecaster’s prediction to describe a normal probability distribution that can be used to approximate the demand distribution.

Sketch the distribution and show its mean and standard deviation. Hint: To find the standard deviation, think Empirical Rule covered in Week 1.

Compute the probability of a stock-out for the order quantities suggested by members of the management team (i.e. 15,000; 18,000; 24,000; 28,000).

Compute the projected profit for the order quantities suggested by the management team under three scenarios: pessimistic in which sales are 10,000 units, most likely case in which sales are 20,000 units, and optimistic in which sales are 30,000 units.

One of SuperFun’s managers felt the profit potential was so great the order quantity should have a 70% chance of meeting demand and only a 30% chance of any stock- outs. What quantity would be ordered under this policy, and what is the projected profit under the three sales scenarios?

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