(Answered) : Daily demand for fresh cauliflower in the ZZ-Warehouse store follows normal distribution with mean 100 cartons and s.d. 20 cartons

Daily demand for fresh cauliflower in the ZZ-Warehouse store follows normal distribution with mean 100 cartons and s.d. 20 cartons. The ZZ-Warehouse buys at a cost of $50.00 per carton, sells it for $70.00 per carton. Unsold cartons are sold for $20.00 per carton. What is the optimal order quantity, using the single period model? QUESTION 35 O 100 O 80 O 95 O 110 O 105

Expert Answer

For items sold,

Profit is $70-$50= $20

For item’s not sold,

Loss is $20-$50 = – $30

As mean is 100 and s.d. is 20.

As loss is higher than profit, one would order less

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