a perishable dairy product is ordered daily at a particular supermarket. the product, which costs $1.15 per unit, sells for $1.59 per unit. if units are unsold at the end of the day, the supplier takes them back at a rebate of $1 per unit. assume that daily demand is approximately normally distributed with µ = 140 and ? = 25.
*to identify the areas for standard normal distribution use the z tables.*
a) what is your recommended daily order quantity for the supermarket? round your answer to the nearest whole number.
q* =
b)what is the probability that the supermarket will sell all the units it orders? round your answer to three decimal places.
p(stockout) =
c)in problems such as these, why would the supplier offer a rebate as high as $1? for example, why not offer a nominal rebate of, say, 25¢ per unit? what happens to the supermarket order quantity as the rebate is reduced?
the higher quantity that the supermarket should order. (choose from : increases or decreases)