Gaulle Company began the year with a balance of $6,000 in Accounts Receivable and ended the year with $9,000 in the account. Rev
1 answer:
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Answer:
a) $3
b) $2
c) 1449
Explanation:
Given:
The cost for a carton of milk = $3
Selling price for a carton of milk = $5
Salvage value = $0 [since When the milk expires, it is thrown out ]3
Mean of historical monthly demand = 1,500
Standard deviation = 200
Now,
a) cost of overstocking = Cost for a carton of milk - Salvage value
= $3 - $0
= $3
cost of under-stocking = Selling price - cost for a carton of milk
= $5 - $3
= $2
b) critical ratio =
or
critical ratio =
or
critical ratio = 0.4
c) optimal quantity of milk cartons = Mean + ( z × standard deviation )
here, z is the z-score for the critical ration of 0.4
we know
z-score(0.4) = -0.253
thus,
optimal quantity of milk cartons = 1,500 + ( -0.253 × 200 )
= 1500 - 50.6
= 1449.4 ≈ 1449 units
Answer:
The second gamble has the higher expected value. EV = 4
Explanation:
In betting, expected value can be defined as (Amount won per bet * probability of winning) – (Amount lost per bet * probability of losing)
For the first gamble:
For the second gamble:
This means that Cal is expected to earn $4 for each $20 waged on the second gamble while he is expected to break even in the first gamble.
Therefore, the second gamble has the higher expected value.