Question 3 Single-period Inventory Control for Continuous Distribution Demand (4 marks) A newsagent sells ' The Daily
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Question 3 Single-period Inventory Control for Continuous Distribution Demand (4 marks)
A newsagent sells 'The Daily Business Bulletin' for $5.50 per copy. The bulletins are purchased from a printing company at the cost of $3.50 per copy. The unsold bulletins at the end of each day will be returned to the printing company for recycling and it will pay the newsagent $0.50 per copy returned. The daily demand for the bulletins is distributed normally with an average of 500 copies and a standard deviation of 90 copies.
- If the newsagent wants to limit the bulletin's probability of stockout at 10%, how many copies of the bulletin should it carry daily? (1 mark)
- Based on the marginal cost of underestimating and overestimating demands, what is the optimal stock of the bulletins that the newsagent should carry daily? (1 mark)
- If the newsagent decides to carry the bulletin's daily stock of 500 copies, what should be the selling price of the bulletins so that the 500 copies become an optimal stock; provided all other costs and demand volumes remain the same? (2 marks)
Related Book For
Accounting Information Systems
ISBN: 9780132871938
11th Edition
Authors: George H. Bodnar, William S. Hopwood
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