What are unit underage cost and overage cost

Reference no: EM133627472

Question

The local supermarket buys lettuce each day to ensure fresh produce. Each morning any lettuce that is left from the previous day is sold to a dealer that resells it to farmers who use it to feed their animals. This week the supermarket can buy fresh lettuce for $5.00 a box. The lettuce is sold for $12.00 a box and the dealer that sells old lettuce is willing to pay $1.50 a box. Past history says that tomorrow's demand for lettuce (Normally distributed) averages 200 boxes with a standard deviation of 35 boxes.

1. What are the unit underage cost and overage cost?

2. How many boxes of lettuce should the supermarket purchase tomorrow?

Reference no: EM133627472

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