Suppose that a grocery store buys milk for $2.10 and sells it for $2.60. If the milk gets old then the grocery store can sell their unsold milk back to their wholesaler for $0.60 (so the grocery store loses $1.50 on each gallon that it has to sell back to the wholesaler). Suppose that the demand for milk is normally distributed with a mean of 2,471 gallons per week and a standard deviation of 363 gallons per week. The grocery store needs to decide how much milk to order. Suppose that instead of trying to maximize their expected profits, the store wanted to be 95% sure that they have enough milk to satisfy demand. How much milk should they order?
Suppose that a grocery store buys milk for $2.10 and sells it for $2.60. If the milk gets old then the grocery store can sell their unsold milk back to their wholesaler for $0.60 (so the grocery store loses $1.50 on each gallon that it has to sell back to the wholesaler). Suppose that the demand for milk is normally distributed with a mean of 2,471 gallons per week and a standard deviation of 363 gallons per week. The grocery store needs to decide how much milk to order. Suppose that instead of trying to maximize their expected profits, the store wanted to be 95% sure that they have enough milk to satisfy demand. How much milk should they order?
Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter10: Statistics
Section10.4: Distributions Of Data
Problem 19PFA
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Suppose that a grocery store buys milk for $2.10 and sells it for $2.60. If the milk gets old then the grocery store can sell their unsold milk back to their wholesaler for $0.60 (so the grocery store loses $1.50 on each gallon that it has to sell back to the wholesaler). Suppose that the demand for milk is normally distributed with a mean of 2,471 gallons per week and a standard deviation of 363 gallons per week. The grocery store needs to decide how much milk to order. Suppose that instead of trying to maximize their expected profits, the store wanted to be 95% sure that they have enough milk to satisfy demand. How much milk should they order?
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