Uniform distribution on the interval

Reference no: EM131105206

The campus bookstore must decide how many textbooks to order for a course that will be offered only once. The number of students who will take the course is a random variable D, whose distribution can be approximated by a (continuous) uniform distribution on the interval [40, 60]. After the quarter starts, the value of D becomes known. If D exceeds the number of books available, the known shortfall is made up by placing a rush order at a cost of $14 plus $2 per book over the normal ordering cost. If D is less than the stock on hand, the extra books are returned for their original ordering cost less $1 each. What is the order quantity that minimizes the expected cost?

Reference no: EM131105206

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