# Question: The demand for a product of Carolina Industries varies greatly

The demand for a product of Carolina Industries varies greatly from month to month. The probability distribution in the following table, based on the past two years of data, shows the company’s monthly demand.

Unit Demand Probability

300 ........... .20

400 ........... .30

500 ........... .35

600 ........... .15

a. If the company bases monthly orders on the expected value of the monthly demand, what should Carolina’s monthly order quantity be for this product?

b. Assume that each unit demanded generates $70 in revenue and that each unit ordered costs $50. How much will the company gain or lose in a month if it places an order based on your answer to part (a) and the actual demand for the item is 300 units?

Unit Demand Probability

300 ........... .20

400 ........... .30

500 ........... .35

600 ........... .15

a. If the company bases monthly orders on the expected value of the monthly demand, what should Carolina’s monthly order quantity be for this product?

b. Assume that each unit demanded generates $70 in revenue and that each unit ordered costs $50. How much will the company gain or lose in a month if it places an order based on your answer to part (a) and the actual demand for the item is 300 units?

## Answer to relevant Questions

A university found that 20% of its students withdraw without completing the introductory statistics course. Assume that 20 students registered for the course.a. Compute the probability that 2 or fewer will withdraw.b. ...The unemployment rate in the state of Arizona is 4.1% (CNN Money website, May 2, 2007). Assume that 100 employable people in Arizona are selected randomly.a. What is the expected number of people who are unemployed?b. What ...The following table is a partial probability distribution for the MRA Company’s projected profits (x 5 profit in $1000s) for the first year of operation (the negative value denotes a loss). x f(x) 2100 .......... .10 ...For its “Music 360” survey, Nielsen Co. asked teenagers and adults how each group has listened to music in the past 12 months. Nearly two-thirds of U.S. teenagers under the age of 18 say they use Google Inc.’s ...The National Safety Council (NSC) estimates that off-the-job accidents cost U.S. businesses almost $200 billion annually in lost productivity (National Safety Council, March 2006). Based on NSC estimates, companies with 50 ...Post your question