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Sarah has an independent bookstore in downtown and also sells popular magazines. National geographic is among the magazine that still sells a considerable number of copies. Sarah wants to determine how many copies of national geographic to order at the start of the upcoming month. (National geographic is a monthly periodical). The magazine retails at $28.00. Sarah purchases the magazine at $20.00. She will dispose of all unsold copies of the magazine at 50% price off retail price, at the end of the month. Sarah estimates that the demand for the magazine during the month is normal with a mean of 1000 and standard deviation of 250.
a. Suppose Sarah wants to maximize her expected profits from the sale of this magazine. Determine how many copies she should order from the publisher.
b. Suppose Sarah orders 1500 copies of national geographic. What is Sarah's expected profit?
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