Did you ever figure out the answer, I'm stuck on this rn /:
Answer:
219 sheets
Explanation:
D = 5000 per year,
d = daily demand = 5000/365 = 13.70 sheets
T = time between orders (review) = 14 days
L = Lead time = 10 days
σd= Standard deviation of daily demand = 5 per day
I = Current Inventory = 150 sheets Service Level
P = 95% (Probability of not stocking out) q=d(L+D)z σ T+L-1
σ T+L-1= square root (T+L)=5 square root 14+10= 24.495
From Standard normal distribution, z = 1.64 for 95% Service Level (or 5% Stock out)
q=13.70*(14+10)+1.64(24.495)-150
= 218.97 →219 sheets
Answer:
Explanation:
The time (T) = 6 months = 6/12 years = 0.5 years
Interest rate (r) = 6% = 0.06
The stock is priced [S(0)] = $36.50
The price the stock sells at 6 months (
) = $3.20
European call (K) = $35
The price (P) is given by:
![P=V_c+K.e^{-rT}-S(0)+Dividends\\But, Dividends = 0.5*e^{-0.25*0.06}+ 0.5*e^{-0.5*0.06}\\Therefore, P=V_c+K.e^{-rT}-S(0)+0.5*e^{-0.25*0.06}+ 0.5*e^{-0.5*0.06}\\Substituting:\\P=3.2+35*e^{-0.06*0.5}-36.5+0.5*e^{-0.25*0.06}+ 0.5*e^{-0.5*0.06}\\P=3.2+33.9656-36.5+0.4926+0.4852\\P=1.64](https://tex.z-dn.net/?f=P%3DV_c%2BK.e%5E%7B-rT%7D-S%280%29%2BDividends%5C%5CBut%2C%20Dividends%20%3D%200.5%2Ae%5E%7B-0.25%2A0.06%7D%2B%200.5%2Ae%5E%7B-0.5%2A0.06%7D%5C%5CTherefore%2C%20P%3DV_c%2BK.e%5E%7B-rT%7D-S%280%29%2B0.5%2Ae%5E%7B-0.25%2A0.06%7D%2B%200.5%2Ae%5E%7B-0.5%2A0.06%7D%5C%5CSubstituting%3A%5C%5CP%3D3.2%2B35%2Ae%5E%7B-0.06%2A0.5%7D-36.5%2B0.5%2Ae%5E%7B-0.25%2A0.06%7D%2B%200.5%2Ae%5E%7B-0.5%2A0.06%7D%5C%5CP%3D3.2%2B33.9656-36.5%2B0.4926%2B0.4852%5C%5CP%3D1.64)
The price of a 6-month, $35.00 strike put option is $1.65