Hanson brothers inc sells industrial-strength aluminum foil, Ask an Expert

Management Studies

Hanson Brothers, Inc. sells industrial-strength aluminum foil used by companies in large-scale manufacturing processes. Their best-selling grade of aluminum foil costs $250 per square yard to manufacture and sells for $325. Due to the long manufacturing lead times involved, Hanson Brothers, Inc. can only place a single order of this product. At this price, the anticipated demand is expected to follow a normal distribution with mean of 20,000 square yards and standard deviation of 8000 square yards. Any unsold aluminum foil at the end of the sales season will be disposed of to a third party salvage operation for $75 per square yard. It costs Hanson Brothers $35 per square yard to hold inventory for the entire selling season. a) How many square yards should Hanson Brothers order for the upcoming season? b) What is the expected profit from following this policy? c) On average, how many square yards will Hanson Brothers have left over at the end of the season?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M93107982

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