The monthly Toronto Maple Leafs fan magazines are printed 1 week prior to the start of sales for each monthly issue during the season. Attendance averages 90 000 screaming and loyal Leafs fans during the life of each issue. Two-thirds of these fans usually buy the program, following a normal distribution, for $4 each. Unsold programs are sent to a recycling centre that pays only 10 cents per program. The standard deviation is 5000 programs, and the cost to print each program is $1.
a) What is the cost of underestimating demand for each program?
b) What is the over age cost per program?
c) How many programs should be ordered per game?
d) What is the stock out risk for this order size?