**Problem 20-10 (Algo)**You are a newsvendor selling *San Pedro Times* every morning. Before you get to work, you go to the printer and buy the day’s paper for $0.45 a copy. You sell a copy of *San Pedro Times* for $1.40. Daily demand is distributed normally with mean = 340 and standard deviation = 68. At the end of each morning, any leftover copies are worthless and they go to a recycle bin.**a. How many copies of San Pedro Times should you buy each morning?** (*Use Excel’s NORMSINV() function to find the correct critical value for the given α-level. Round your z-value to 2 decimal places and final answer to 2 decimal places.*)- [ ] Answer is complete but not entirely correct. - Optimal order quantity: 0.05**b. Based on a, what is the probability that you will run out of stock?** (*Round your answer to the nearest whole number.*)- [ ] Answer is complete but not entirely correct. - Probability: 3 %**Explanation of Components:**1. **Optimal Order Quantity:** - This is the ideal number of copies to purchase based on demand distribution and cost considerations. The value provided is a placeholder (0.05) and needs calculation.2. **Probability of Running Out of Stock:** - This represents the likelihood that demand will exceed the supply of newspapers. The stated probability is 3%, indicating potential stockouts, and the aim is to minimize this while maximizing profit.

Answered: a. How many copies of San Pedro Times…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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