# The demand for a product of Carolina Industries varies greatly from month to month. Based on the

## Question:

The demand for a product of Carolina Industries varies greatly from month to month. Based on the past two years of data, the following probability distribution shows the company’s monthly demand:

Unit Demand Probability

300 ........0.20

400 ........0.30

500 ........0.35

600 ........0.15

a. If the company places monthly orders equal to 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?

c. What are the variance and the standard deviation for the number of units demanded?

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**Related Book For**

## Quantitative Methods for Business

**ISBN:** 978-0324651751

11th Edition

**Authors:** David Anderson, Dennis Sweeney, Thomas Williams, Jeffrey cam