Just Around the Corner is a small bookstore that sells mainly children's books. Books are replenished weekly, and copies of books that are not sold on a weekend are kept on shelves for later sales. The Harry Potter Books retails for $19.95 and cost the bookstore $9.95 per book. Given that Barnes and Noble has a store a block away and Just Around the Corner is out of stock, customers go and buy a copy from Barnes and Noble. Weekly demand for the book was approximate with a normal distribution of 20 and a standard deviation of 8. The book owner uses an annual interest rate of 20 percent to determine the cost of holding. How many copies of the book should be purchased at the beginning of each week?

Answer rating: 100% (QA)

To determine the optimal number of copies of the book to purchase at the beginning of each week we need to consider the tradeoff between the cost of h... View the full answer