The demand for a product of Carolina Industries varies greatly from month to month. The probability distribution in the following table, based on the past two years of data, shows the company's monthly demand. Unit Demand Probability 300 0.17 400 0.27 500 0.44 600 0.12 a. If the company bases monthly orders on the expected value of the monthly demand, what should Carolina's monthly order quantity be for this product? The monthly order quantity should be units. b. Assume that each unit demanded generates $71 in revenue and that each unit ordered costs $43. How much will the company gain or lose in a month if it places an order based on your answer to part (a) and the actual demand for the item is 383 units? - Select your answer -
The demand for a product of Carolina Industries varies greatly from month to month. The probability distribution in the following table, based on the past two years of data, shows the company's monthly demand. Unit Demand Probability 300 0.17 400 0.27 500 0.44 600 0.12 a. If the company bases monthly orders on the expected value of the monthly demand, what should Carolina's monthly order quantity be for this product? The monthly order quantity should be units. b. Assume that each unit demanded generates $71 in revenue and that each unit ordered costs $43. How much will the company gain or lose in a month if it places an order based on your answer to part (a) and the actual demand for the item is 383 units? - Select your answer -
Chapter8: Sequences, Series,and Probability
Section8.7: Probability
Problem 11ECP: A manufacturer has determined that a machine averages one faulty unit for every 500 it produces....
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the "select your answer" part is LOSS/GAIN (pick one)
Transcribed Image Text:The demand for a product of Carolina Industries varies greatly from month to month. The probability
distribution in the following table, based on the past two years of data, shows the company's monthly
demand.
Unit Demand
Probability
300
0.17
400
0.27
500
0.44
600
0.12
a. If the company bases monthly orders on the expected value of the monthly demand, what should Carolina's
monthly order quantity be for this product?
The monthly order quantity should be
units.
b. Assume that each unit demanded generates $71 in revenue and that each unit ordered costs $43. How
much will the company gain or lose in a month if it places an order based on your answer to part (a) and the
actual demand for the item is 383 units?
- Select your answer -
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