You are a newspaper vendor selling San Pedro Times every morning. Before you get

Question

You are a newspaper vendor selling San Pedro Times every morning. Before you get to work, you go to the printer and buy the day%u2019s paper for $0.25 a copy. You sell a copy of San Pedro Times for $1.00. Daily demand is distributed normally with mean = 250 and standard deviation =.50. At the end of each morning, any leftover copies are worthless and they go to a recycle bin.

a) How many copies of San Pedro Times should you buy each morning?

b) Based on a, what is the probability that you will run out of stock?

*Confused on the formula to use to derive at the answer.

Explanation / Answer

a)250+50=300
b) pdf=1/(2pi)^.5sigmae^-(x-250)^2/2sigma^2

where sigma =50

This is gaussian distribution.

Integrate it over 300 to infinity to get the answer, use tables.

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