A daily newspaper is stocked by a coffee shop so its patrons can purchase and read it while they drink coffee. The newspaper costs $1.14 per unit and sells for $1.75 per unit. If units are unsold at the end of the day, the supplier takes them back at a rebate of $1 per unit. Assume that daily demand is approximately normally distributed with μ = 150 and σ = 30.

A. What is your recommended daily order quantity for the coffee shop? (Round your answer to the nearest integer.)

B. What is the probability that the coffee shop will sell all the units it orders? (Round your answer to four decimal places.)

C. In problems such as these, why would the supplier offer a rebate as high as $1? For example, why not offer a nominal rebate? Find the recommended order quantity at 25¢ per unit. (Round your answer to the nearest integer.)

Answer rating: 100% (QA)

Coffee Shop Inventory Management A Recommended Daily Order Quantity To minimize losses from unsold newspapers while maximizing potential profitwe shou... View the full answer