You are a retailer. You buy a product at $6.00 from a supplier and sell it for $10.00. It costs the supplier $4.00. Unsold items can be marked down and sold for $3.0. Demand is normally distributed between with mean 200 and standard deviation 40.
1 Probability:A senior executive at your retail company asks the following “Suppose we were to stock 220 units. What is the probability that our realized profit will be at least $810?†Note: You are concerned here with realized profit not expected profit; realized profit is the profit corresponding to the actual demand value that is realized (occurs) for this item over the selling season, while expected profit averages over all possible demand values.
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