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

15000

18000

24000

28000

10000

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