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A perishable dairy product is ordered daily at a particular supermarket. The product, which costs $1.23 per unit, sells for $1.58 per unit. If units
A perishable dairy product is ordered daily at a particular supermarket. The product, which costs $1.23 per unit, sells for $1.58 per unit. If units are unsold at the end of the day, the supplier takes them back at a rebate of $1 per unit. Assume that daily demand is approximately normally distributed with= 145 and= 20.
- What is your recommended daily order quantity for the supermarket? If required, round your answer to two decimal places.
- Q*=fill in the blank 1
- What is the probability that the supermarket will sell all the units it orders? If required, round your answer to four decimal places.
- P(Stockout) =fill in the blank 2
- In problems such as these, why would the supplier offer a rebate as high as $$1? For example, why not offer a nominal rebate of, say, 25 per unit? What happens to the supermarket order quantity as the rebate is reduced?
- The higher rebate
- the quantity that the supermarket should order.
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