Answer:
Take note that you used X and Y as the name of the two products but the options provided was changed to product A and B. Not withstanding, it doesn't affect the answer.
The correct answer is option (A) Product A, because it has less certain demand
Explanation:
A. Product A, because it has less certain demand.
Explanation:
Product X and Y both have the same critical ratio and both are normally distributed. Although, the demand for product X is uncertain but due to it's large standard deviation of demand, the optimal order quantity is greater.
When a product has uncertain demand, it means that the seller can not predict the rate of demand of that product by the consumers.
Uncertain demands helps sellers to maximize profit or minimize cost.
In order to maximize profit, uncertain demand is put into consideration by the news vendor.