Question
The manager at a large manufacturer is planning warehousing needs for the coming year. She predicts that warehousing needs will be normally distributed, with
The manager at a large manufacturer is planning warehousing needs for the coming year. She predicts that warehousing needs will be normally distributed, with a mean of 500,000 square feet and a standard deviation of 150,000. The manager can obtain a full-year lease at $0.5 per square foot per month or purchase storage space on the spot market if more space is needed. Spot market rates have averaged $0.7 per square foot per month. How large an annual contract should the manager sign for the full-year lease?
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Cost management a strategic approach
Authors: Edward J. Blocher, David E. Stout, Gary Cokins
5th edition
73526940, 978-0073526942
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