5.73 Prairie Flower Cereal has annual sales revenue of $400,000,000. George Severn, a 58-year-old senior vice president,

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5.73 Prairie Flower Cereal has annual sales revenue of

$400,000,000. George Severn, a 58-year-old senior vice president, is responsible for production and sales of Nougy 93 Fruity cereal. Daily production in cases is normally distributed, with a mean of 100 and a variance of 625. Daily sales in cases are also normally distributed, with a mean of 100 and a standard deviation of 8. Sales and production have a correlation of 0.60.
The selling price per case is $10. The variable production cost per case is $7. The fixed production costs per day are $250.

a. What is the probability that total revenue is greater than total costs on any day?

b. Construct a 95% acceptance interval for total sales revenue minus total costs.

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Related Book For  book-img-for-question

Statistics For Business And Economics

ISBN: 9780273767060

8th Global Edition

Authors: Paul Newbold, Mr William Carlson, Ms Betty Thorne

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