Green Thumb, a manufacturer of lawn care equipment, hasintroduced a new product. The anticipated demand is normallydistributed with a mean of m = 100 and a standard deviation of s =40. Each unit costs $150 to manufacture and the introductory priceis to be $200 to achieve this level of sales. Any unsold units atthe end of the season are unlikely to be very valuable and will bedisposed off in a fire sale for $50 each. It costs $20 to hold aunit in inventory for the entire season. How many units shouldGreen Thumb manufacture for sale? What is the expected profit fromthis policy? On average, how many customers does Green Thumb expectto turn away because of stocking out? Input the data from theproblem into the Input section of the spreadsheet and respond tothe three questions posed in the problem. Expand upon the solutionby considering the following: Green Thumb has investigated ways toimprove its profitability. Option 1: they have found an outlet thatwill pay them $60 per unit for overstocks. Option 2: they areexploring raising the price from $200 to $230 per unit. However,the mean demand is expected to drop from 100 to 70. Option 3involves a retrofit to their manufacture process that would reduceunit cost from $150 to $130. However, the cost of the retrofit addsback $10 to each unit. By manipulating the input data, determinethe Cu, Co, CSL, EO, EU and profit for each option individually andin any combination. Which would you choose and why? SHOW A SUMMARYTABLE OF YOUR STUDY IN THE EXCEL SPREADSHEET.
