Determine the optimal number of trees

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Reference no: EM131632088

A local farm sells freshly cut Christmas trees to its neighborhood customers. It orders all the trees for that season at the end of October for $25 each. The selling price is always $55/tree. The farm orders no additional trees regardless of customer demand, i.e. customers will be turned away if no more trees are left. However, if there are any leftover trees unsold after the holiday, it will cost the farm $1.50/tree to transport them to a paper-mill in New Hampshire, and sell for $2/tree. The owner has kept track of the demand pattern in the previous years, and found that the average yearly demand for Christmas trees at the farm is 100 trees, with a standard deviation of 8. Please determine the optimal number of trees to order in October for this upcoming season.

Reference no: EM131632088

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