Question: π½π½ = LAST 4 DIGITS OF YOUR STUDENT NUMBER (e.g., S043210ο 3210; S090807ο 0807) π½π½πΊπΊ = SUM OF DIGITS OF V (e.g., 3210ο 6; 0807ο 15) FTX Inc, an electronics system integrator, is developing a new product as part of their annual generational upgrades. Owing to their long business history, they are considering Setronics as the supplier of hardware for thisπ½π½ = LAST 4 DIGITS OF YOUR STUDENT NUMBER (e.g., S043210ο 3210; S090807ο 0807) π½π½πΊπΊ = SUM OF DIGITS OF V (e.g., 3210ο 6; 0807ο 15)
FTX Inc, an electronics system integrator, is developing a new product as part of their annual generational upgrades. Owing to their long business history, they are considering Setronics as the supplier of hardware for this product. Setronicsβ selling price is $(ππππππ β π½π½πΊπΊ) per unit, including transportation costs. Due to long lead times and high setup costs, both firms agree on a single replenishment order before the upcoming annual season. Assume Setronicsβ gross margin is 60% of its selling price for units produced in this pre-season order.
FTXβs recent annual demand forecast is Normally distributed with mean (ππππππππ π½π½) and standard deviation (ππππππ β π½π½πΊπΊ). FTX sells each unit, after integrating their proprietary software, for $(ππππππ π½π½πΊπΊ). Leftovers at the end of the season are liquidated for $30 per unit. FTX incurs holding costs at $π½π½πΊπΊ/ππππ per unit per month.
Make sure to use the following information in calculating Cu, Co, and holding costs when needed:
ο FTX begins incurring holding costs upon delivery. Ignore holding costs at Setronics. ο βLeftoverβ items are held for the whole duration of the selling season. ο βSoldβ items are held in the inventory for half the duration of the selling season (on average).
a) [45] How many of these units should FTX order to maximize their annual expected profits? Calculate resulting expected profits for FTX and Setronics. Hint: Use the Newsvendor model.
Suppose a local supplier, ATEC Inc, approaches FTX with the possibility of supplying this unit. ATECβs main value proposition is that they offer 100% in-stock probability with 5-day delivery on all FTXβs orders, regardless of quantity and time of orders. Since FTX promises its customers a 2-week lead time, this highly reactive capacity at ATEC would enable FTX meet all their demand, as in βmake-to-orderβ. ATECβs unit price is $130 per unit.
b) [10]SupposeFTXweretoprocureonlyfromATEC.WhatwouldbeFTXβsprofit?
c) [45] Suppose FTX plans to use both suppliers: A single pre-season order from Setronics, and then supply from ATEC as needed. How many units should FTX order from these suppliers? Calculate resulting expected profits for FTX. Hint: Use βrevenues minus costsβ to calculate profit, and make sure to include holding costs.
V=1673
VS=17
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