You own a grocery store and need to manage the inventory of bananas. The bananas last 5 days before they go bad and must be removed from the shelf. You know a single- period inventory model is the right way to manage the inventory of bananas so you calculate the underage cost to be $2.20 per bunch and the overage cost to be $0.80 per bunch. If the average demand for bananas over a 5-day period (your "selling season") is 129 bunches with a standard deviation of 46 bunches, how many bunches of bananas should you purchase every 5 days to maximize your profit?
You own a grocery store and need to manage the inventory of bananas. The bananas last 5 days before they go bad and must be removed from the shelf. You know a single- period inventory model is the right way to manage the inventory of bananas so you calculate the underage cost to be $2.20 per bunch and the overage cost to be $0.80 per bunch. If the average demand for bananas over a 5-day period (your "selling season") is 129 bunches with a standard deviation of 46 bunches, how many bunches of bananas should you purchase every 5 days to maximize your profit?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:You own a grocery store and need to manage
the inventory of bananas. The bananas last 5
days before they go bad and must be
removed from the shelf. You know a single-
period inventory model is the right way to
manage the inventory of bananas so you
calculate the underage cost to be $2.20 per
bunch and the overage cost to be $0.80 per
bunch. If the average demand for bananas
over a 5-day period (your "selling season") is
129 bunches with a standard deviation of 46
bunches, how many bunches of bananas
should you purchase every 5 days to
maximize your profit?
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