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One of QBP s bicycle models for the upcoming season is known as the Surley - 0 0 7 . This will be the first

One of QBPs bicycle models for the upcoming season is known as the Surley-007. This will be the first offering of this new model. The wholesale price for the Surley-007(i.e., the price QBP charges bike shops) will be $750 per bicycle. Based on an analysis of prior sales history for like-skus, seasonal demand at this price point for the Surley-007 is estimated to be normally distributed with a mean of 10,000 and a standard deviation of 3,500. In terms of expenses, QBP must pay the supplier $200 per bicycle ordered as well as an additional $10 per bicycle for shipping (including customs duties, etc.). QBP also incurs a seasonal holding cost, which is accounted as 10% of QBPs purchased cost. For the Surley-007, this results in a holding cost of $200 x 10%= $20 per bicycle. QBP also pays its sales staff a 15% commission, computed again as a % of QBPs purchased cost, for each bicycle sold to a bike shop.

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