Specialty Toys_weather Teddy 2l1c59

Quantitative techniques case study for Specialty Toys

Prepared byAnuj Sharma Anurita Arya Ankit Kumar

Introduction  Specialty toys Inc. sells a variety of new and innovative toys for children.  It plants to produce a new product called Weather teddy which is manufactured by a company in Taiwan.  This weather teddy is a variation of the talking teddy bear and predicts the weather when pulled by finger

Introduction  The prediction is between the responses “It looks to be a very nice day! Have fun.” to “I think it may rain today. Don’t forget your umbrella.”  The prediction is bought to result by a built in barometer and survey shows that its predictions nearly rival those given by sone local television’s weather forcasts.

Information  Pre holiday season is the best time to introduce new toys.  The ideal time for introducing the toy in market is from the month of April.  Cost of Weather teddy is 160 with its selling price settled at 240  Selling price of surplus inventory is set to be at 50.

Information  Forecast predicted for the demand of Weather teddy implies a 0.9 probability of demand between 10,000 to 30,000 units.  Management suggested quantities of Weather teddy production of 15,000 , 18,000 , 24,000 or 28,000 respectively

Problem  Demand for a children’s toy can be highly volatile.  If a toy gets popular then it could lead to realization of higher profits and sales amounts leading to shortage of product in market

Problem  If the toy fails with popularity it leaves the company with high inventory which then have to be sold at reduced prices setting company in loss.

Objective  To analyze the situation and prepare a feasible solution for the problem predicting the optimal volume of the teddy such that nor sales, nor the profit is hampered.

Solution  Probability=0.9  Corresponding z value=1.28  sigma=(30000-20000)/1.28 =7812.5  Range=20000(+/-)7812.5 =22187.5-27821.5

Solution

Solution    

P(z>15000)=0.7389 P(z>18000)=0.6 P(z>24000)=0.31 P(z>28000)=0.1539

Projected Profits Sales vs units

15000

18000

24000

28000

10000

250000

-80000

-360000

-1180000

20000

1200000

1440000

1480000

720000

30000

1200000

1440000

1920000

2240000

Specialty manager’s prediction      

Probability=.70 Z=0.52 0.52=(x-20000)/7812.5 X=20000+4062.5 X=24062.5 Hence 24062.5 must be ordered…

Recommendations  The recommendation is to bring 24000 orders as per the recommendation of the speciality manager

Thank You