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Es seguro l https://www.mathx.com/Studen erHomework.aspx?ho kid=454559704&questionId;=2&flushed;=false&cid;=4643172&centenn.;, a Homework: Hw 3 (Inventory) Score: 0 of 10 pts 100f 10 (5 complete) HW Score: 50%, 50 of 100 pts Problem 12.51 Question Help | * Cynthia Knott's oyster bar buys fresh Louisiana oysters for $4 per pound and sells them for $10 per pound Any oysters not sold that day are sold to her cousin, who has a nearby grocery store, for $3 per pound. Cynthia believes that demand follows the normal distribution, with a mean of 120 pounds and a standard deviation of 12 pounds. How many pounds should she order each day? Refer to the standard normal table for z-values Cynthia should order pounds of oysters each day round your response to one de mal place box and t All parts showing

Explanation / Answer

here wholsale cost = $4 per pound

retail price = $ 10 per pound

Salvage Value = $3 per pound

Demand distribution is normal with 120 pounds as mean and 12 pounds standard deviation.

Let say Ordered quantity is Q units.

For a normal distribution :

F(Q) = underage cost/ [ underage cost + overage cost]

where,

underage cost = the incremental per-unit cost for not meeting demand. = $ 10 - $ 4 = $ 6

overage cost = the incremental per-unit cost for any items that cannot be sold. = $4 -$3 = $1

so F(Q0)= 6/(6 + 1) = 6/7 = 0.8571

so Here,

Pr( X < Q0 ; 120 ; 12) = 0.8571

from Z - table, value of Z = 1.07

(Q0 - 120)/ 12 = 1.07

Q0 = 120 + 12 * 1.07 = 132.84 units or 132.8 poundssay 133 pounds oyster must be order

Answer is 132.8 pounds

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