Question
Scenario : Early every morning, Thabo, a vendor at OR Tambo Airport, orders newspapers to sell that day. If he orders too many newspapers; the
Scenario: Early every morning, Thabo, a vendor at OR Tambo Airport, orders newspapers to sell that day. If he orders too many newspapers; the leftover papers go back to the publisher for a small
credit/rebate (below the cost price that Thabo pays). If he doesn't order enough newspapers,
some customers will be disappointed, and sales and profit will be lost. Thabo hires a Wits Business
School (WBS) MBA student to advise him on an optimal inventory strategy for stocking the
Business Day, his best-selling newspaper. Suppose Thabo sells an average of 110 copies of the
Business Day per day. The WBS MBA student believes that the sales of the newspaper are normally
distributed with a standard deviation of 15 papers. Thabo pays R10 for each paper, which sells for
R21.50. The Business Day gives Charles a R5.50 credit/rebate for each unsold paper.
Question: How many copies of the Business Day should Thabo order each day?
Please show the formulas and calculations. Many thanks !!
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