Questions 2 (20 points) The retail price of a Mother's Day cake in San Ramon Safeway is $30.00. A local bakery sells the cakes to the Safeway at $20.00. The Safeway will dispose of all of the unsold cakes at 50% off the retail price, at the end of the Mother's Day weekend. The manager in Safeway estimates that demand for this cake during the Mother's Day weekend is Normal Distribution with a mean of 100 cakes and a standard deviation of 50 cakes. (1) How many copies should San Ramon Safeway order from the publisher? (2) If the store manager learned a new forecast method in a class that would reduce the standard deviation of estimated demand from 50 to 25 (mean remains 100), how many cakes should San Ramon Safeway order from the local bakery? Hint: Apply single period (news vendor) inventory model: Cu = ? Co= ? P=Cu/(Cu+ Co) Z(P) = NORMSINV(P) = Ordering Quantity = Mean + Z(P) * Std