# Supply Chain Calculations

Scenario: Carrier sells air conditioning units to distributors. Ahead of the upcoming summer, demand probability is 40,000 units (25%), 55,000 units (35%), 70,000 units (25%), and 80,000 units (15%).
· Fixed cost of production = \$500,000
· Variable cost of production per unit = \$1,200
· Per unit selling price= \$1500
· Salvage value for unsold products = \$900

If the manufacturer is      considering production quantities of 40,000 units or 80,000 units,      assuming 90% of product will be sold and 10% will be salvaged, what is the      profit per unit? Which option would you select and why?
The manufacturer is      considering production quantities of 40,000 units or 80,000 units. For the      40,000 unit plan, assume 95% of product will be sold and 5% will be      salvaged; for the 80,000 unit plan, assume 80% of product will be sold and      20% will be salvaged. What is the profit per unit? Which option would you      select and why?
With an expected demand of      55,000 units for the summer (May–July), a maximum demand of 80,000 units      for the summer, and a 2-week lead time, calculate the amount of safety      stock needed to cover demand.
If the manufacturer      chooses to produce 70,000 units but there is demand for 80,000 units, how      much total profit and per-unit profit would be lost?

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