Cynthia Knott's oyster bar buys fresh Louisiana oysters for $3 per pound and sells them for $8 per pound. Any oysters not sold that day are sold to her cousin, who has a nearby grocery store, for $2 per pound. Cynthia believes that demand follows the normaldistribution, with a mean of 100 pounds and a standard deviation of 20 pounds. How many pounds should she order each day? Refer to the standard normal table LOADING... for z-values.

111 pounds

Explanation:

The number of pounds Cynthia should order each day can be calculated as follows

Calculation

Standard deviation = 20

Mean = 100

Cost of actual utilization = 8-3 = 5

Cost of Under utilization = 4-2 = 2

Probability of sale = Co/(Cu+Co)

Probability of sale = 5/(5+2)

Probability of sale =0.714

Z score at above probability = z = 0.57

hence cynthia should order= mean+z*standard deviation

Order = 100+0.57*20

Order = 111.4 or 111 pounds

um sure

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