Ask Question
15 January, 05:38

Store A uses the newsvendor model to manage its inventory. Demand for its product is normally distributed with a mean of 500 and a standard deviation of 300. Store A purchases the product for $10 each unit and sells each for $25. Inventory is salvaged for $5. What is its maximum profit? $5000 $12,500 $7500 $8000

+3
Answers (1)
  1. 15 January, 05:46
    0
    maximum profit = $7500

    so correct option is c $7500

    Explanation:

    given data

    mean = 500

    standard deviation = 300

    cost = $10

    price = $25

    Inventory salvaged = $5

    to find out

    What is its maximum profit

    solution

    we get here maximum profit that is express as

    maximum profit = mean * (price - cost) ... 1

    put here value in equation 1 we get maximum profit

    maximum profit = mean * (price - cost)

    maximum profit = 500 * ($25 - $10)

    maximum profit = 500 * $15

    maximum profit = $7500

    so correct option is c $7500
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Store A uses the newsvendor model to manage its inventory. Demand for its product is normally distributed with a mean of 500 and a standard ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers