What is the recommended order quantity

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A retail store sells a seasonal product for $10 per unit. The cost of the product is $8 per unit. All units not sold during the regular season for half the retail price in an end-of-season clearance sale. Assume that the demand for the product is normally distributed with a mean of 5oo and a variance of 100. a) What is the recommended order quantity? b) To keep customers happy and returning to the store later, the owner feels that stockouts should be avoided if at all possible. What is your recommended order quantity of the owner is willing to tolerate a 5% probability of a stockout or a 95% probability of always having the product?

Reference no: EM131031635

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