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. Word count requirement 750-800.
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.