Business, 25.02.2020 02:29 hope10079

Tammi’s Truck Stop sells Seat-o-Nails cushions, which are specifically designed to keep drivers awake on the road. Her accessories supplier makes deliveries every Tuesday, at which times she can get as many cushions as she wants (the supplier always has extras in his truck). Tammi, who was a statistics major in college, has done some calculations and estimates that weekly demand for cushions is normally distributed with mean 35 and standard deviation 10. The cushions cost her $40 wholesale and she sells them for $65. Tammi uses a 35 percent interest rate to evaluate the cost of holding inventory. It is Tuesday, she has 12 cushions in stock and the supplier has just arrived. Assuming that the weekly demand is normally distributed with mean 35 and standard deviation 10, answer the questions below. (hint: use newsvendor model)

How many cushions should Tammi buy if sales are lost when she runs out of stock during the week?
Reconsider part (a) if unmet demand is not lost but it is back ordered, and it costs Tammi $12 to mail the cushion to the customer.

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Tammi’s Truck Stop sells Seat-o-Nails cushions, which are specifically designed to keep drivers awak...

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