Explore BrainMass

Explore BrainMass

    Single Period Inventory Model with Probabilistic Demand

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    The Fitness Shop is considering ordering a special model exercise machine. Each unit will cost the shop $220 and it will sell for $400. Any units not sold at the regular price will be sold at the year-end model clearance for $150. Assume that demand follows a normal probability distribution with µ = 10 and variance = 3. What is the recommended order quantity?

    I end up with Cu=360 and Co=78... and I know that isn't correct. My P(demand <= Q*) = .66

    And I end up with Q*=43. It's supposed to end up being 26. Can you show me how this problem is supposed to be worked out?

    © BrainMass Inc. brainmass.com March 4, 2021, 6:25 pm ad1c9bdddf

    Solution Summary

    Single period inventory model with probabilistic demand is investigated. Recommended order quantity is calculated. The solution is detailed and well presented.