Company needs to order special chemical

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Question

A company needs to order a special chemical that will be sold during the upcoming season. Only one order can be made before the season begins. The demand for the chemical is forecasted to be Normally distributed with a mean of 250 gallons and a standard deviation of 125 gallons. The company purchases the chemical for $10 per gallon, sells it for $45 per gallon, and must spend $5 per gallon to dispose of all unsold chemical at the end of the season due to government regulations. If demand is more than the ordered quantity, then the company sells only what is available and the rest of the demand is lost.

Reference no: EM133770275

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