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# Expansion Strategy and Re Order Point Establishment

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Subject Area:Statistics

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Your score is 3. Respectfully, Marlene Expansion Strategy and Re-Order Point Establishment Sheila Bellmon QNT/561 : Applied Business Research & Statistics November 26, 2018 Professor Marlene Casel Expansion Strategy and Re-Order Point Establishment Big corporations are faced with the responsibility of deciding the most efficient ways to expand their businesses. Therefore, the management must reason objectively to develop a strategy with the best possible outcomes in terms of profits. A firm can seek to expand if the industry is growing and has a positive and steady cash flow, or if its customer base demands for an expansion. Therefore, business expansion may expose the company to a wider variety of audience. The medium scale developmental decision will however hold benefits of: low \$50,000, medium \$150,000 and appeal of \$200,000. The estimation of the values for the medium and large scale methods assists the firm’s administration in picking that which produces higher returns.

Expected value for the expansion alternatives profits. The company should select the medium scale alternative, since it will offer higher expected returns. Therefore more favorable for the company’s expansion goals. Variance utilizes squares since it tends to weigh the outliers more heavily as compared to data that is very close to the mean. Excellent! The Case Study of Kyle Bits and Bytes Kyle Bits and Bytes is a retail company that deals with computer products. The management has to figure out the demand in its fiscal year so as to avoid shortages of inventory in the foreseeable future. The company orders 200 units every week while it has a lead time of one week. The company’s sales are however not steady with a weekly standard deviation of 30. It must be in computer days.

This can be computed by increasing the supply delay in the normal day by day request, by the delay applicable for the delay control purpose to happen. The difference is figured out as the total of the supply demand of day by day variation for the number of days for the reordering to happen. Where, q = Average daily orders day in day demand T = Lead time σ = Standard deviation of the demand daily. s = Number of deviations corresponding to the service day in day level of chance Therefore the reorder point will be: In this we will use the function NORM. The safety stock can be reduced by reducing the overall variability of demand and reducing order sizes. The firm can also reduce its supplier lead time, improve its forecast accuracy and reduce its manufacturing lot sizes so as to have a lower safety stock.

Therefore, a firm must strive to keep its customers’ morale high through tactful products and restocking using stock unit triggers. ­ References Bain, A. and Evans, J. Profit. C.  Calculating the expected value and the standard deviation of the total profit. Online] Mathematics Stack Exchange. Available at: https://math. Welling’s, F.  Forecasting company profits. Cambridge, England: Woodhead Pub. Xu, K.  A multi-location continuous review, order quantity-reorder point (Q, R) inventory model with emergency transshipments. Managers constantly have to make decisions under uncertainty. This assignment gives students an opportunity to use the mean and standard deviation of probability distributions to make a decision on expansion strategy. The second case is on determining at which point a manager should re-order a printer so he or she doesn’t run out-of-stock. The second case uses normal distribution.