The demand for a product of Carolina Industries varies greatly from month to month. The probability distribution
Question:
The demand for a product of Carolina Industries varies greatly from month to month. The probability distribution in the following table, based on the past two years of data, shows the company’s monthly demand.
Unit Demand Probability
300 ............20
400 ............30
500 ............35
600 ............15
a. If the company bases monthly orders on the expected value of the monthly demand, what should Carolina’s monthly order quantity be for this product?
b. Assume that each unit demanded generates $70 in revenue and that each unit ordered costs $50. How much will the company gain or lose in a month if it places an order based on your answer to part (a) and the actual demand for the item is 300 units?
DistributionThe word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
Step by Step Answer:
Essentials Of Statistics For Business And Economics
ISBN: 9781305081598
7th Edition
Authors: David Anderson, Thomas Williams, Dennis Sweeney, Jeffrey Cam