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s2008m [1.1K]
3 years ago
5

Cynthia​ Knott's oyster bar buys fresh Louisiana oysters for ​$3 per pound and sells them for ​$8 per pound. Any oysters not sol

d that day are sold to her​ cousin, who has a nearby grocery​ store, for ​$2 per pound. Cynthia believes that demand follows the normal​distribution, with a mean of 100 pounds and a standard deviation of 20 pounds. How many pounds should she order each​ day? Refer to the standard normal table LOADING... for​ z-values.
Business
1 answer:
iragen [17]3 years ago
3 0

Answer:

111 pounds

Explanation:

The number of pounds Cynthia should order each day can be calculated as follows

Calculation

Standard deviation = 20

Mean = 100

Cost of actual utilization = 8-3 = 5

Cost of Under utilization = 4-2 = 2

Probability of sale = Co/(Cu+Co)

Probability of sale = 5/(5+2)

Probability of sale =0.714

Z score at above probability = z = 0.57

hence cynthia should order= mean+z*standard deviation

Order = 100+0.57*20

Order = 111.4 or 111 pounds

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