What is the expected profit for ordering that single bottle

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A supermarket, sells soy milk bottles at 2.00 dollar each to the customers and buys them at 0.80 dollar each with a sixty-day expiration. When expired, they are returned to the supplier for 0.20 dollar each (the supplier pays the supermarket). For the order arrived today, the store manager expects a demand of 1,000 bottles, normally distributed with standard deviation 200. (i) Suppose 1,200 bottles arrived today, what is the profit if the demand turns out to be exactly 1,000? (ii) Suppose only one bottle arrived today, what is the profit if it is sold and what is the profit if it remains unsold? (iii) What is the probability that these two events happen? What is the expected profit for ordering that single bottle? (iv) Using marginal analysis, show how to find the optimal order quantity, (v) Would that change if the standard deviation increased? If so, how and why?

Reference no: EM13967287

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