Consider the same company selling winter ski sleds as in your notes book. Demand follows a normal distribution with a mean of 100,000 units and a standard deviation of 15,000 units. The variable cost of production is $15 per unit and the sale price is $45. To get rid of the leftover inventory faster and vacate the warehouse, the company decides to adopt a technology to dispose of the leftover inventory. With this new technology, it costs $5 to dispose of one unit. How many units should the company produce?
Ski Sled Problem
April 6, 2016
Consider the same company selling winter ski sleds as in your notes book. Demand follows a
normal distribution with a mean of 100,000 units and a standard deviation…