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The J&B Card Shop sells calendars depicting a different Colonial scene each month. The once-a-year order for each year's calendar arrives in September. From past experience, the September to July demand for the calendars can be approximated by a normal probability distribution with r=500 and o=120. The calendars cost $1.50 each, and J&B sells them for $3 each.
a. If J&B throws out all unsold calendars at the end of July (i.e., salvage value is zero), how many calendars should be ordered?
b. If J&B reduces the calendar price to $1 at the end of July and can sell all surplus calendars at this price, how many calendars should be ordered?
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