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Suppose that a grocery store buys milk for $2.10 and sells it for $2.60. If the milk gets old then the grocery store can sell their unsold milk back to their wholesaler for $0.60 (so the grocery store loses $1.50 on each gallon that it has to sell back to the wholesaler). Suppose that the demand for milk is normally distributed with a mean of 2500 gallons per week and a standard deviation of 400 gallons per week. The grocery store needs to decide how much milk to order. They decide that they want to order an amount of milk such that their expected profit on the last gallon sold is 0. Therefore, if p denotes the probability of selling a gallon of milk (notice that the probability of selling a gallon of milk is related to the number of gallons of milk because the demand for milk is normally distributed) then the expected profit is p (.50) + (1-p) (-1.50). If we set this equal to 0 and solve for p then we get p = .75. Therefore, if the grocery store's goal is to maximize its expected profit then they should order an amount of milk such that the probability of selling that amount of milk (or more) is 75%. How many gallons of milk should the store order?
An advantage of observing statistics from this range is that it encapsulates both positive and negative performances of the economy helping to produce a much more accurate insight
factors in economic growth
WHAT IS THE CENTRAL PROPOSITION OF THE ORTHODOX KEYNESNIANS?
Occurrence: It is found in a range of foods based on fruits. Presence of patulin in fruit juice is a indication that the juice was extracted from poor quality fruit which is undesi
a) Use the arc-approximation formula to calculate the price-elasticity of demand coefficient of a firm's product demand between the (quantity, price) points of (100, $20) and (300,
Q. Describe the working of Commercial banks? Fact that currency inside commercial banks isn't money may strike you as odd though it is an important principle. 100 dollar bill i
At first, it may seem obvious that consumption will rely on Y. If GDP is doubled in real terms over a number of years, government consumption, private consumption and investment wi
objective of the study
Based on the recent success of Ontario tennis star Milos Raonic, Nike Canadawill produce new state of the art tennis racket with a red maple leaf on the strings. Mike expects to se
However, these results should be approached with due caution. The limitations and problems associated with VAR modelling have been outlined in this paper, therefore these observati
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