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Every year, the local Fire house sells calendars that has pictures of the “Fireman of the Month” and some local coupons on the back page as a fundraiser.They use the proceeds to support the local Boys and Girls Club and are a big hit in the community. The once-a-year order for each year’s calendar arrives in September.From past experience, the September-to-July demand for these calendars can be approximated by a normal distribution with a mean of 2500 and a standard deviation of 400.The calendars cost $4.00 each to print and are sold for $10.00 each
If the firemen throw out all unsold calendars at the end of July (i.e., salvage value is zero), how many calendars should be ordered?
If the firemen reduce the price of the calendars to $3.00 at the end of July and can sell all surplus calendars at this price, how many calendars should be ordered?
Comment on the difference in the 2 numbers and why you think they might be different.
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