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    Recommended Order Quantity

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    The Fitness Shop is considering ordering a special model exercise machine. Each unit will cost the shop $410 and it will sell for $750. Any units not sold at the regular price will be sold at the year-end model clearance for $340. Assume that demand follows a normal probability distribution with mean = 20 and standard deviation = 6. What is the recommended order quantity?

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    Solution Preview

    suppose the demand is x units of machines (with x being a random variable of N(20, 6)), the shop should order x units, because if the shop orders more units, it will suffer a loss of 410 - 340 = $70.

    But what is x? From the properties of a normal ...

    Solution Summary

    Recommended Order Quantity

    $2.19

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