Question
The manager at Sportmart, a sporting goods store, has to decide on the number of skis to purchase for the winter season. Based on past
The manager at Sportmart, a sporting goods store, has to decide on the number of skis to purchase for the winter season. Based on past demand data and weather forecasts for the year, management has forecast demand to be normally distributed, with a mean of m = 320 and a standard deviation of s = 80. Each pair of skis costs c = $100 and retails for p = $250. Any unsold skis at the end of the season are disposed of for $85. Assume that it costs $10 to hold a pair of skis in inventory for the season. How many skis should the manger order to maximize expected profits?
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