# Expansion strategy and establishing a re-order point

PART1

Purpose of Assignment

This assignment has two cases. The first  case is on expansion strategy. Managers constantly have to make  decisions under uncertainty. This assignment gives students an  opportunity to use the mean and standard deviation of probability  distributions to make a decision on expansion strategy. The second case  is on determining at which point a manager should re-order a printer so  he or she doesn’t run out-of-stock. The second case uses normal  distribution. The first case demonstrates application of statistics in  finance and the second case demonstrates application of statistics in  operations management.

Assignment Steps

Resources: Microsoft Excel®, Bell Computer Company Forecasts data set, Case Study Scenarios

Write a 1,050-word report based on the Bell Computer Company Forecasts data set and Case Study Scenarios.

Case 1: Bell Computer Company

• Compute the expected value for the profit associated with the two  expansion alternatives. Which decision is preferred for the objective of  maximizing the expected profit?
• Compute the variation for the profit associated with the two  expansion alternatives. Which decision is preferred for the objective of  minimizing the risk or uncertainty?

Case 2: Kyle Bits and Bytes

• What should be the re-order point? How many HP laser printers should he have in stock when he re-orders from the manufacturer?

Format your assignment consistent with APA format.

PART2

SuperFun Toys Case Study

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 Excel®, 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?

Format your assignment consistent with APA format.

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