As the buyer for an air conditioner distributor you need to determine how many air conditioners you should purchase for the upcoming season. The air conditioner costs you $90 and sells for $100. If your customers have any unsold product at the end of the season, you agree to buy the product back. For each product that is returned, the cost for return freight, warehousing, and an allowance for repackaging and damages is $15. The next season, you expect to sell these products at $5 below your original cost.

1) Using the Z table, convert the ideal ratio of being over supplied to the number of standard deviations below or above the mean.

2) If the average annual demand is 8,000 units with a standard deviation of 1,600 units, how many air conditioners should you buy with the upcoming season?