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As owner of Fresh Catch fish shop, you can purchase fresh fish from a supplier at $18 per crate. Local restaurants are willing to pay you $120 per crate. However, demand from these restaurants on any given day is uncertain – it is distributed normally each day with a mean of 100 crates and standard deviation of 30 crates. Any unsold fish must be disposed of by the end of the day – disposal incurs a cost of $2 per crate.
a. How many crates should you purchase daily from your supplier?
b. If your supplier offers you a farmed variety of the fish that lasts two days instead of just one, how many crates should you purchase if you only order every other day from this supplier? Assume daily demand remains the same as before.
c. In which case, a) or b), do you expect to waste more fish?
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