Problem 7-27 You are the buyer for your university bookstore. One of the textboo
ID: 3042763 • Letter: P
Question
Problem 7-27 You are the buyer for your university bookstore. One of the textbooks has a cost to you of $170 and you sell it to students for $340. In this case, however, you cannot salvage any value from copies that do not sell because a new edition is published every semester. Demand for this text averages 150 copies each semester, with a standard deviation of 24 copies. Use Appendix A. How many should you order each semester? (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole number.)Explanation / Answer
Purchase price = 170
Selling price = 340
Salvage price =0
MP = selling price - purchase price = 170
ML = Purchase price - salvage price = 170
Books should be ordered such that P => ML / MP+ML = 0.5
Since the value P=0.5 corresponds to z=0, we have
Quantity to be ordered Q = mu +z x sigma
Q = 150+0x24 = 150
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