Reference no: EM132721099

Monsanto sells genetically modified seed to farmers. It needs to decide how much seed to put into a warehouse to serve demand for the next growing season. It will make one quantity decision. It costs Montanso $6 to make each kilogram (kg) of seed. It sells each kg for $43. If it has more seed than demanded by the local farmers, the remaining seed is sent overseas. Unfortunately, it only earns $2 per kg from the overseas market (but this is better than destroying the seed because it cannot be stored until next year). If demand exceeds its quantity, then the sales are lost-the farmers go to another supplier. As a forecast for demand, it will use a normal distribution with a mean of 350,000 and a standard deviation of 125,000. Use Table 13.4

A. How many kilograms should montanso place in the warehouse before the growing season?

B. If montanso put 450000 kgs in the warehouse, what is its expected revenue (include both domestic revenue and over seas revenue)?

C. How many kilograms should MOntanso place in the warehouse to minimize inventory while ensuring that the stockout probability is no greater than 10%

D. What is maximum profit for this seed?