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. Dont 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 televisions 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 childrens 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 10000 15000 18000 24000 28000

250000

-80000

-360000

-1180000

20000

1200000

1440000

1480000

720000

30000

1200000

1440000

1920000

2240000

Specialty managers 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