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Q. 4. S & G Card shop sells calendars depicting a different colonial scene each month. The once a year order for each year's calendar arrives in October. From past experience, the October to June demand for the calendars can be approximated by a normal probability distribution with a mean of 800 and a variance of 3600. The calendars cost $2.40 each and S & G sells them $3.70 each.
a) If S & G throws out all unsold calendars at the end of June (salvage value is zero), explain how many calendars should be ordered?
b) If S & G reduces the calendar price to $1.6 at the end of June and can sell all surplus calendars at this price, explain how many calendars should be ordered?
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