Hamptonshire Express: Problems 1-3 Essay

bother 1A. How many sweetspapers should Sheen stock? Use the simulation in the spreadsheet Hamptonshire Express chore 1 to identify the optimal stocking sum. What is the profit at this stocking quantity? best Stocking Quantity 584Expected profit at Optimal Stocking Quantity $331.43 B. Verify that the prize derived in part (a) is consistent with the optimal stocking quantity in the Newsvendor model= mean = 500= Standard Deviation = 100= Overage hurt = $0.20$0 = $0.20= Shortage Cost = $0.20$1.00 = $0.80= 1.8 = .2 corresponding zvalue = .84.Problem 2A. How many hours should Sheen invest daily in the inception of the profile section?The optimal amount of hours Sheen should invest results in optimal profit/day at 4 hours With optimal stocking quantity 685And judge profit/day $371.33B. What explains Sheens choice of effort aim h?Since the marginal cost of her effort is $10/hour and the marginal proceeds of her effort is equal to8 * 50 = 10 h = 42The hours invested will be opti mized when marginal cost = marginal benefit, in this illustration h = 4. C. Comp be the optimal profit under this scenario with the optimal profit derived in Problem 1.Optimal Profit in 1 = $331.43 584 wholes = $0.5675/unit Optimal Profit in 2 = $371.33 685 units = $0.5421/unitAlthough the optimal profit is increased from scenario 1 to scenario 2 by $39.90 the per unit profit is down by 0.0254/unit produced, however since overall profit is up, the added hours invested is still optimal.Problem 3A. Assuming h=4 what would Armentrouts stocking quantity be?Armentrouts optimal stocking quantity is 516B. Why does the optimal stocking quantity differ from the optimal stocking quantity identify in Problem 2? Is the result here consistent with the newsvendor construction?The optimal stocking quantities differ because there is a new player involved and new costs associated with overages and shortages. These results are still consistent with the newsvendor formula since the new model looks like= mean = 600= Standard Deviation = 100= Overage Cost = $0.80= Shortage Cost = $1.00$0.80 = $0.20= 1.8 = .2 corresponding zvalue = .85 .C. outright try varying h How does her optimal effort in this question differ from the answer in question 2? Why?In interrogate 2, Sheens profit is maximized at optimal effort = 4. In Question 3, Sheens profit is optimal when h = 2 because her meshwork are being shared with Armentrout and the amount of hours Sheen invests determines the amount of copies that Armentrout will purchase depending on his demand.D. How would changing the transfer price from the current value of $0.80 per theme impact Sheens effort level and Armentrouts stocking decision?Transfer Price Increase from $0.80 to $0.90 =Sheens Effort = 2.25 to 3.063Armentrouts Stocking termination = 491 to 459Sheens incentivized to put in more effort and therefore reap more profit but Armentrouts stock will correct and present less profit if transfer price is increased.Transfer Pric e Decrease from $0.80 to $0.70 =Sheens Effort = 2.25 to 1.563Armentrouts Stocking Decision = 491 to 510If the transfer price is decreased, Sheens incentivized to put in less effort because she is making less profit and Armentrouts stock will increase since his costs are lower allowing him to make a higher profit.E. What conclusion can you draw about stocking and effort levels in a differentiated channel vis vis an integrated rigid that manufactures and retails its product?Stocking and effort levels are optimized throughout the chain in an integrated firm that manufactures and retails its products because there is a direct benefit and because incentives are line up between manufacturing and retailing. They want to put forth the optimal effort to produce the maximum amount of units that will optimize profits.Optimal Profit in Problem 2 h=4 $371.33 685 Units with fill rate 98%In a differentiated firm when there is an added level, in this case a level to retail, the manufacturing an d retailing parties do not share the same goals, therefore stocking and effortlevels are not optimized. Supplier just now wants to produce as much as retail will buy at the minimum effort level and retail only wants to buy as much as will make them an optimal profit, I because stocking excess will incur losses.Optimal Profit in Problem 3 h=4 516 Units with fill rate of only 86%