Critical Fractile - Assignment Example

A PROFESSIONAL REPORT Name: Institution: Question 1 (3) Using the critical fractile criterion decision rule, the result in part is confirmed. The critical fractile indicated the seasonal variation in the number of customers that use the hotel rooms in the different months of the year. The variation was because some rooms are overcharged while others have flat rate charged per night. Therefore, the deal between Emmet and Billy Bob has played a great role narrowing the gap. Indicated making the decision to use the rooms at last. Since some of the rooms were overbooked, it made it possible to cover up the money that would be lost due no show since no show mains losing money in that night. Also indicated the best option for the production increase because Emmet and Bill Bod entered into a deal to cover up the loss so that they can minimize it and keep the gains going to the rooms per night. The critical fractile indicated the setting of the target inventory control since there was a possibility of the loss due to no show. Since the target stock was a little bit small, they did not incur a high cost. Selection of the good facility capacity. Since they were expecting the no show to occur, a better option was taken to overbook some rooms so as to gain some money from overbooking. (4) Where the customers get no room available for use in the night, they become so disappointed because some of the customers are the daily customer and have made that place the number one priority for their everyday use. Others become stranded to the extent that they fail to get another place that suit the standard of the chosen hotel. However, this can be solved by the provision of the extra rooms called reserved individual rooms for an emergency so as to satisfy the needs of the usual customers. Question 5 (1) For the mean of the daily customer sale (normal distribution of 365 days) of 167 makes it a good sales for the year as the level of sales turnover can be high so that average indicates a real sale. It is possible to make the significant profit as seen from the sales since the rate of turnover can very high hence more sales and profits. For the variation of as the standard distribution of 29 means the changes in the customer demand is low on average making it useful and easy to maintain the client in their buying moods. The rate of turnover can be high since the customers are willing and able to buy in large quantity and most of the time they need the cakes. The recommendation to maintain the customers quality expectations should be emphasized since this is one of the key techniques is meeting the needs of the clients and maintaining them at a particular place as their preferred distribution point. The duration of the time for placing the order and receiving the requested items (cakes) of 36 days means there is a very high demand due to the majority of the buyers placing their orders. The benefit of this is more to the supplier since they can have constant supply due to ready demand but on the side of the buyer, they may experience some difficulties in their sales since sometimes they may run out of stock due to long duration of waiting at some ]time they can lose some profit. This long period of waiting for the product (cakes) can be reduced by creating many outlets so as to meet the demand of many buyers and also to increase their sales and profits. The cost (translator, contract exchange) of $ 127 is worth the product being supplied because being the only supplier they can increase the price at their will due to the monopoly of the market. The exchange rate should being in line with the high quality of the product so as to reduce due to the high cost of the products. The opportunity cost of 14% means their fewer options of the alternative source of supply since most of the customers rely on only a few available source of supply for their products (cakes). Therefore, the supplier has a better chance of maximizing sales as they have more customers for their products. The value of $23.50 for One-Tool- Caker is the least price for which the supplier can give its product to the buyer. This value is the starting price for each cake, and it is the amount that the provider expects to make the profits that cover up the cost of production and all other expenses incurred during production. The service of 75% (company standard) makes the company capable of maintaining its customer expectation to get satisfied with the products they buy from the producer. It also portrays the company compliance with the clients in meeting their demands and where they can still expect better service delivery. It has the merit of building confidence in the customers to trust the suppliers and their products hence more sales and profit to the supplier. (2) For calculating the daily average of the consumer sales, the formula is simply the total sales divided by the number of days in a year (365 days). The suppliers looked his sales in the period of one year and also look at the rate at which he or she sells out the product and estimates the total sales for them to be in position to obtain the averages. By looking at the normal distribution curve, it can be possible to determine the variation in the daily sales and also the duration of placing the order and receiving the product can be obtained by forecasting the total production to the number of customers expected to buy the product. The opportunity cost was obtained by looking the number of alternatives available for the customers, and the estimate can be made by examining the number of time they visit the shop for buying the product. The z- score was obtained by subtracting the mean from the score and dividing it by the standard deviation. (3) The review period of two weeks is recommended and the target inventory that determines the capability to meet the future demand and satisfaction of the customers. The hands on inventory, the scheduled receipts should be high while keeping the back orders little to increase profits and sales and maintain the high level of service delivery and customer satisfaction. The safety stock level has changed because the average sales are high, and the percentage opportunity cost is quite small. Therefore at the lead time of replenishment the probability of running out of inventory is slight as seen from the variation of the average daily sales and the opportunity cost percentage. Using the continuous review Th e safety stock is given by zσL, Where; z is the number of the standard deviations from the average required to attain the desired service level and; σL is a standard deviation of the lead time demand. For the periodic review The safety stock is given by zσP+L, Where; z is the number of standard deviation required to attain the desired service level and; σP+L is a standard deviation for the lead time demand (L) plus the review period (P). Looking at the implication, it is found that the safety stock is much under the system of periodic review than the continuous review. (4) From the inventory control system and looking at the satisfaction derived by the customers after the consumption of the product, it can be recommended that the more the customers consumes the commodity, the more they get satisfied and in the end they demand less of the product. Therefore, it was possible for the product to fall from class A in the first year of class C in the second year. So here the consumers can get tired or more satisfied with product to the extent that they start demanding less of the commodity since there is no extra satisfaction they get from the product as compared to the new product that has just come to the market. The explanation was based on the principle of marginal utility that says the more the unit of the product consumed the lesser the extra satisfaction the customers get from consumer more of the product. (5) The system depends on the human wants; here where the people find no more satisfaction from consuming cakes, the demand reduces since they are not getting the additional satisfaction. The product depends on the use; cakes in most cases are used as escort for taking tea, sodas, etc. and cannot be used for food so where time for food comes there is no need for cakes. It depends on time and season; cakes is in high demand during morning hours where people are interested in taking breakfast but when it reaches lunch hours its market fall due to less need for tea. Depends on the number of customers; where the customer numbers are high the demand for cakes rises due to much need for the product (cake) but when the customer numbers reduce due to reduction in their demand the need for cakes decreases. The rationale for implementation of the system is helpful in the sense that the new product has high demand than the old product because it has high level of satisfaction than the old product since people are interested in using the new product than the old ones. References Akȧli, E. (2005). Applications of Supply Chain Management and E-Commerce Research. New York: Springer Science+Business Media, Inc. Bajpai, N. (2009). Business statistics. Delhi: Pearson. Black, K. (2010). Business statistics: For contemporary decision making. Hoboken, NJ: Wiley. 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