Question
The grocery store manager receives a delivery of a fresh dairy product from a local dairy each day. Any inventory not sold by the end
The grocery store manager receives a delivery of a fresh dairy product from a local dairy each day. Any inventory not sold by the end of the day is returned to the dairy for a rebate. Daily demand for this product is normally distributed with a mean of 25.50 lbs. and a standard deviation of 5.84 lbs. If the manager ordered 40 lbs. of the product for delivery today
The manager in question wants to use the single-period inventory model with probabilistic demand to determine the optimal order quantity. The product costs the store $1.45/lb. and is sold by the store for $3.50/lb. Assuming the end-of-day rebate on unsold stock is $0.85/lb, what is the optimal daily order quantity?
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Get StartedRecommended Textbook for
Financial Accounting
Authors: Robert Libby, Patricia Libby, Daniel Short, George Kanaan, M
5th Canadian edition
9781259105692, 978-1259103285
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