# Question: The demand for Carolina Industries product varies greatly from month

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

Unit Demand ...... Probability

300 ........... 0.20

400 ........... 0.30

500 ........... 0.35

600 ........... 0.15

a. If the company places monthly orders equal to 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?

c. What are the variance and standard deviation for the number of units demanded?

Unit Demand ...... Probability

300 ........... 0.20

400 ........... 0.30

500 ........... 0.35

600 ........... 0.15

a. If the company places monthly orders equal to 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?

c. What are the variance and standard deviation for the number of units demanded?

**View Solution:**## Answer to relevant Questions

In 2003, the average stock price for companies making up the S&P 500 was $30, and the standard deviation was $8.20 (BusinessWeek, Special Annual Issue, Spring 2003). Assume the stock prices are normally distributed.a. What ...ABC Inc. and XYZ Co. are the two dominant companies providing chargers, adapters, and other accessories for cell phones. Each of these Silicon Valley companies is developing a new line of smartphone accessories, and each has ...Refer to the sensitivity report for Problem 14 in Figure 8.19.a. Interpret the ranges of optimality for the objective function coefficients.b. Suppose that the manufacturing cost increases to $11.20 per case for model A. ...If the Albany highway system described in Problem 29 has revised flow capacities as shown in the following network, what is the maximal flow in vehicles per hour through the system? How many vehicles per hour must travel ...A study of the multiple-server food-service operation at the Red Birds baseball park shows that the average time between the arrival of a customer at the food-service counter and his or her departure with a filled order is ...Post your question