Question: A small grocery store sells fresh produce which it obtains

A small grocery store sells fresh produce, which it obtains from a local farmer. During the straw-berry season, demand for fresh strawberries can be reasonably approximated using a normal distribution with a mean of 40 quarts per day and a standard deviation of 6 quarts per day. Excess costs run 35 cents per quart. The grocer orders 49 quarts per day.
a. What is the implied cost of shortage per quart?
b. Why might this be a reasonable figure?

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  • CreatedDecember 30, 2014
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