Question: Powered by Koffee ( PBK ) is a new campus coffee store. PBK purchases its coffee from a local supplier, Phish Roasters, for a price

Powered by Koffee (PBK) is a new campus coffee store. PBK purchases its coffee from a local supplier, Phish Roasters, for a price of $25 per bag. PBK has to pay a cost of $185 for every delivery order independent of the order size. The holding cost due to warehousing expenses is $1 per bag per month on average. The current market price for the coffee sold by PBK is $50 per bag. Moreover, PBK estimates that the cost of good will is $10 per bag if PBK does not satisfy the market demand. Assume for simplicity that each order takes exactly 2 months to arrive. PBK estimates the monthly demand for its coffee has a normal distribution with a mean of 50 and a standard deviation of 10. Assume for simplicity that the demand for each month is independent from each other.

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