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Arada [10]
4 years ago
13

Dan's Independent Book Store is trying to decide on how many copies of a book to purchase at the start of the upcoming selling s

eason. The book retails at $28.00. The publisher sells the book to Dan at $20.00. Dan will dispose of all of the unsold copies of the book at 50% off the retail price, at the end of the season. Dan estimates that demand for this book during the season is Normal with a mean of 1000 and a standard deviation of 250. How many copies should Dan order so as to maximize expected profit?
a. 1340

b. 1045

c. 1020

d. 1000

e. 1125

f. 1375
Business
1 answer:
Usimov [2.4K]4 years ago
3 0

Answer:

The answer is b as he should order 1045 copies to maximize his profits.

Explanation:

As

CR=\frac{C_{u} }{C_{o}+C_{u}  }

So,

Given :

C_{o} =20-14=6

C_{u} =28-20=8

Thus

CR=\frac{8 }{6+8  }

     =57.14\%

thus      Q^{*} =Norm.inu(0.5714,1000,250)

                 =1045.0032

                  ≈ 1045

Which is option b.

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Answer:

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I hope my answer helps you

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