1. The manager of a hardware store is planning purchases of room air conditioners in preparation for the summer season. They have quotes from two distributors: Distributor 1 charges $150/unit but given lead times can only deliver prior to the start of the season. Distributor 2 charges $180/unit but can fill a second order after the start of the season. The manager is planning on charging $225/unit during the sales season but $140/unit for any items left over at the end of the season. If they were to order in advance for the full season, their plans will be based on the expected demand of 5,000 units with a standard deviation of 500. If they only need to order initially for early season sales, their planning will be based on the expected demand of 1,000 units with a standard deviation of 125. 
2. How much will the manager have to pay each distributor?

Answer rating: 100% (QA)

ANSWER I The manager needs to decide between ordering all units from Distributor 1 or just the initi... View the full answer