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As a newspaper distributor in Chicago, you are attempting to minimize oversupply to maximize profits. When you purchase the newspapers from the printer, you buy the day’s paper for $0.25 a copy. You sell a copy of the paper for $1.00. Daily demand is distributed normally with mean = 250 and standard deviation = 50. At the end of each morning, any leftover copies are worthless and they go to a recycle bin.
a. How many copies of the newspaper should you buy each morning? (Use Excel's NORMSINV() function to find the Z-score. Round intermediate calculations to four decimal places. Round your answer to the nearest whole number.)
b. Based on part (a) above, what is the probability that you will run out of stock? (Round your answer to the nearest whole percent.)
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