Dan McClure owns a thriving independent bookstore in artsy New Hope, Pennsylvania.He must decide how many copies to order of a new book, Power and Self-Destruction,an exposé on a famous politician’s lurid affairs. Interest in the book will be intense atfirst and then fizzle quickly as attention turns to other celebrities. The book’s retail priceis $20, and the wholesale price is $12. The publisher will buy back the retailer’s leftovercopies at a full refund, but McClure Books incurs $4 in shipping and handling costsfor each book returned to the publisher. Dan believes his demand forecast can be represented by a normal distribution with a mean of 200 and a standard deviation of 80.a. Dan will consider this book to be a blockbuster for him if it sells more than 400 units.What is the probability that Power and Self-Destruction will be a blockbuster? b. Dan considers a book a “dog” if it sells less than 50 percent of his mean forecast. Whatis the probability this exposé is a “dog”? c. What is the probability that demand for this book will be within 20 percent of themean forecast? d. What order quantity maximizes Dan’s expected profit? e. If Dan orders the quantity needed to achieve a 95 percent in-stock probability, what isthe probability that some customer won’t be able to purchase a copy of the book? f. Suppose Dan orders 300 copies of the book. What is Dan’s expected leftover inventory?g. Suppose Dan orders 300 copies of the book. What are Dan’s expected sales? h. Suppose Dan orders 300 copies of the book. What is Dan’s expected profit? i. How many books should Dan order if he wants to achieve a 95 percent in-stockprobability?
Unitary Method
The word “unitary” comes from the word “unit”, which means a single and complete entity. In this method, we find the value of a unit product from the given number of products, and then we solve for the other number of products.
Speed, Time, and Distance
Imagine you and 3 of your friends are planning to go to the playground at 6 in the evening. Your house is one mile away from the playground and one of your friends named Jim must start at 5 pm to reach the playground by walk. The other two friends are 3 miles away.
Profit and Loss
The amount earned or lost on the sale of one or more items is referred to as the profit or loss on that item.
Units and Measurements
Measurements and comparisons are the foundation of science and engineering. We, therefore, need rules that tell us how things are measured and compared. For these measurements and comparisons, we perform certain experiments, and we will need the experiments to set up the devices.
Dan McClure owns a thriving independent bookstore in artsy New Hope, Pennsylvania.
He must decide how many copies to order of a new book, Power and Self-Destruction,
an exposé on a famous politician’s lurid affairs. Interest in the book will be intense at
first and then fizzle quickly as attention turns to other celebrities. The book’s retail price
is $20, and the wholesale price is $12. The publisher will buy back the retailer’s leftover
copies at a full refund, but McClure Books incurs $4 in shipping and handling costs
for each book returned to the publisher. Dan believes his demand forecast can be represented by a
a. Dan will consider this book to be a blockbuster for him if it sells more than 400 units.
What is the
b. Dan considers a book a “dog” if it sells less than 50 percent of his mean forecast. What
is the probability this exposé is a “dog”?
c. What is the probability that demand for this book will be within 20 percent of the
mean forecast?
d. What order quantity maximizes Dan’s expected profit?
e. If Dan orders the quantity needed to achieve a 95 percent in-stock probability, what is
the probability that some customer won’t be able to purchase a copy of the book?
f. Suppose Dan orders 300 copies of the book. What is Dan’s expected leftover inventory?
g. Suppose Dan orders 300 copies of the book. What are Dan’s expected sales?
h. Suppose Dan orders 300 copies of the book. What is Dan’s expected profit?
i. How many books should Dan order if he wants to achieve a 95 percent in-stock
probability?
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