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Montanso is a large bio firm that sells genetically modified seed to farmers. They need to decide how much seed to put into a warehouse
Montanso is a large bio firm that sells genetically modified seed to farmers. They need to decide how much seed to put into a warehouse to serve the demand for the next growing season. They will make one quantity decision. It costs Montanso $ to make each kilogram kg of seed. They sell each kg for $ If they have more seed than demanded by the local farmers, the remaining seed is sent overseas. Unfortunately, they only earn $ per kg from the overseas market but this is better than destroying the seed because it cannot be stored until next year If demand exceeds their quantity, then the sales are lost, and the farmers go to another supplier. As a forecast for demand they will use a normal distribution with a mean of and a standard deviation of
How many kilograms should they place in warehouse if they want to minimize inventory while ensuring stockout probability is no greater than
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