Calculated the order quantity

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Reference no: EM133986045

Assignment:

You are a procurement manager who pays $200 per item from your supplier. As is typical of procurement, at the time you make an order you can only forecast demand. You forecast that demand is normally distributed with a mean of 2,000 units and a standard deviation of 500 units. Each unit sells for $500. Unfortunately, unsold units are worthless and cannot be sold (i.e., the units are worth $0 at the end of a selling cycle).

In the previous class assignment, you calculated the order quantity, Q, that maximizes the expected profit. (Q=2130).

Using the Q above, calculate the following:

1. What are the expected lost sales? (round the answer to closes number).

2. What are the expected sales? (2125 is a wrong answer for this one).

Reference no: EM133986045

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