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Your company is producing Magic Liquid, a drink that helps people stay awake and pay attention during technical presentations or classes. The consumers of this product are mainly university students and managers working in tech companies. To produce a bottle of Magic Liquid you need a can of Magic Beans that another company is selling. Your company is ordering Magic Beans every 30days. The maximum supply of Magic Beans every 30 days follows a random distribution with minimum 15000, most likely 20000 and maximum 25000. The cost per can is $5 for the full order, and is only $4.8 if the supplier do not have enough to fulfill your order. Your company needs to process Magic Beans to turn it into Magic Liquid, the variable cost of this process is random and provided in the excel file. The fixed cost for managing the company is $10,000 for every 30 days. The selling price for Magic Liquid is $15 per bottle. The demand of Magic liquid for every 30 days is random and also given in the excel file. Run a simulation to decide on what would be your optimal order size of Magic Beans every 30 days to maximize expected profit with the constraint that the standard deviation of profit is at most $10,000. (Note: be careful in your analysis, demand and manufacturing cost are correlated)

Operation Management, Management Studies

  • Category:- Operation Management
  • Reference No.:- M93133240

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