Alex sells hotdog at $5 at the Piazza on the Christmas day (Dec. 25). As the supplier requires a firm order by the after

Business, Finance, Economics, Accounting, Operations Management, Computer Science, Electrical Engineering, Mechanical Engineering, Civil Engineering, Chemical Engineering, Algebra, Precalculus, Statistics and Probabilty, Advanced Math, Physics, Chemistry, Biology, Nursing, Psychology, Certifications, Tests, Prep, and more.
Post Reply
answerhappygod
Site Admin
Posts: 899603
Joined: Mon Aug 02, 2021 8:13 am

Alex sells hotdog at $5 at the Piazza on the Christmas day (Dec. 25). As the supplier requires a firm order by the after

Post by answerhappygod »

Alex sells hotdog at $5 at the Piazza on the Christmas day (Dec.
25). As the supplier requires a firm order by the afternoon of Dec.
24, Alex must make a commitment before the demand is known. The
supplier's wholesale price is $3 per unit of hotdog. Alex forecasts
that the daily demand is normally distributed with mean 220 units
and standard deviation 50. Any hotdog left by the end of Christmas
day can be sold for only $2 per unit.
What is the expected overstocking cost for the extra unit if
Alex orders the optimal number of hotdog? Choose the closest answer
if needed.
Group of answer choices
$0.33
$0.67
$1.33
$1.00
$0.50
Join a community of subject matter experts. Register for FREE to view solutions, replies, and use search function. Request answer by replying!
Post Reply