The J & B Card Shop sells calendars with different coral reef pictures shown for each month.

Question:

The J & B Card Shop sells calendars with different coral reef pictures shown for each month. The once- a- year order for each year’s calendar arrives in September. From past experience, the September- to- July demand for these calendars can be approximated by a normal distribution with mean of 500 and standard deviation of 120. The calendars cost $ 1.50 each, and J & B sells them for $ 3 each.

a. If J & B throws out all unsold calendars at the end of July ( i. e., salvage value is zero), how many calendars should be ordered?

b. If J & B reduces the calendar price to $ 1 at the end of July and can sell all surplus calendars at this price, how many calendars should be ordered?

Salvage Value
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