A major fast-food company is running a promotion for children’s meals for which it offers a Sharky toy. A single order will be placed for the toys. Each toy costs $0.50, and any unsold toys will have to be scrapped at the end of the promotion. The margin from each meal (including the toy) is $1.00, and children are likely to go to a competitor if the fast-food company is out of toys. The demand for meals with the toys is forecast to be normally distributed, with a mean of 50,000 and a standard deviation of 15,000.

a. How many Sharky toys should be ordered in advance of the promotion?

b. An issue has been raised that customers who go to competitors may be lost for the long term. It has been estimated that the cost of not having toys in stock is

$5 per stockout because of the loss of current and future sales. How does this information affect the number of Sharky toys to be ordered?