You have decided to sell books for kids for the upcoming social event at the Bookstore. The
Question:
You have decided to sell books for kids for the upcoming social event at the Bookstore. The social event is taking place this Saturday. One of the problems you face is that you have to decide by Friday noon how many books to order from your supplier. You need to keep in mind that there is no opportunity to re-order or change the order once you place your order. You can purchase the books for $3 per unit from your supplier and sell them to your customers for $9 per unit during the social event. If you are left with any book at the end of the event, you can sell them to the bookstore owner at a price of $1 per unit. You estimate that total demand for the book during the event will follow a normal distribution with 150 and standard deviation of 20 books.
What is your cost of overstocking?
What is your critical ratio?
How many books should you order?
What would be your profit if you order based on the optimal ordering decision, and your sales end up being 150 books?
Accounting Principles Part 1
ISBN: 978-1118306789
6th Canadian edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Kinnear, Joan E. Barlow