Answered: The Gilbert Air-Conditioning Company is…

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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Question

The Gilbert Air-Conditioning Company is considering the purchase of a special shipment
of portable air conditioners manufactured in Japan. Each unit will cost Gilbert $80, and it
will be sold for $125. Gilbert does not want to carry surplus air conditioners over until the
following year. Thus, all surplus air conditioners will be sold to a wholesaler for $50 per
unit. Assume that the air conditioner demand follows a normal probability distribution with
μ 5 20 and σ 5 8.
a. What is the recommended order quantity?
b. What is the probability that Gilbert will sell all units it orders?

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

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