# 1.commune is a start-up company that sells seasonal products, which needs to be updated

Question: 1.commune is a start-up company that sells seasonal products, which needs to be updated annually, to U.S. automotive companies. The commune operations team needs to confirm that how many products to make to address demand for the next season. Assume that the commune should make the quantity decision before the selling season. It costs commune \$12 to make
Show transcribed image textTranscribed image text: 1.commune is a start-up company that sells seasonal products, which needs to be updated annually, to U.S. automotive companies. The commune operations team needs to confirm that how many products to make to address demand for the next season. Assume that the commune should make the quantity decision before the selling season. It costs commune \$12 to make each unit. They sell each unit for \$49. If they have more products than demanded by the automotive companies, the remaining product is sent to the outside of U.S. However, the commune can charge only \$7 per unit from the outside of the U.S market. If demand exceeds their quantity, then the sales are lost – the U.S. automotive companies look for another supplier. As a forecast for demand they will use a normal distribution with a mean of 450,000 and a standard deviation of 186,000. How many units should they place in this warehouse before the selling season? Also, if they want to minimize their inventory while confirming that the stock out probability is not greater than five percent, how many units should commune order? You need to demonstrate sufficient explanation for your solution.