# A manager wants to determine how many copies of a particular magazine that

A manager wants to determine how many copies of a particular magazine that he should purchase each week.  A study of historical data shows that demand is normally distributed with a mean = 11.73 and a standard deviation of 4.74.  The manager purchases the magazines for 25 cents and can salvage unsold copies for 10 cents.  The price of the magazine that he charges to the customer is 75 cents a copy.

1.       What is the critical ratio?

2.         Using the normal tables, what is the standardized z value associated with the critical ratio calculated above?

3.        How many magazines should the manager order?

Suppose the manager has historical data for the last 52 weeks showing the weekly demand for the magazine.  The empirical probability associated with each of the order quantities is give below.

 Q Frequency F(Q) Q Frequency F(Q) 0 1 .192 12 4 .5769 1 0 .192 13 1 .5962 2 0 .192 14 5 .6923 3 0 .192 15 5 .7885 4 3 .0769 16 1 .8077 5 1 .0962 17 3 .8654 6 2 .1346 18 3 .9231 7 2 .1731 19 3 .9808 8 4 .2500 20 0 .9808 9 6 .36654 21 0 .9808 10 2 .4038 22 1 1.0000 11 5 .5000

4.        Calculate the new order quantity for the empirical data given.

• Posted: 3 years ago