Cabot Appliances, a retail chain, is trying to decide what size order it should place with its supplier of room air conditioners. Room air conditioner sales are highly seasonal, and the number of units sold is very dependent on summer weather patterns. Carbot places one order per year. Reorders are impractical after the selling season begins to develop. Although the actual sales level cannot be known for sure, Cabot analyzes past selling seasons, long-term weather reports, and the general state of the economy. Cabot estimates that the demand for the air conditioner follows a normal distribution with a mean of 1000 and a standard deviation of 100. A unit has a delivered price to Carbot of $320 and it is priced to customers at $400. Air conditioners unsold at the end of the season are discounted to $300, which clears them from inventory. How many room air conditioners should Cabot order?

Answer rating: 100% (QA)

Answer 1050 units Explanation Mean 1000 Std Deviation 1... View the full answer