OR 2700, Spring’09
Section 4
Section 4
Feb 16 and Feb 17, 2009.
Problem 1 (Devore 3.35)
A small market orders copies of a certain magazine for its magazine rack each
week. Let
X
= demand for the magazine, with pmf
x
1
2
3
4
5
6
p(x)
1/15
2/15
3/15
4/15
3/15
2/15
Suppose the store owner actually pays $1.00 for each copy of the magazine and
the price to customers is $2.00. If magazines left at the end of the week have no
salvage value, is it better to order three or four copies of the magazine? (
Hint:
For both three and four copies ordered, express net revenue as a function of
demand
X
, and then compute the expected revenue.)
Problem 2 (Devore 3.52, modified)
Suppose that 30% of all students who have to buy a text for a particular course
want a new copy, whereas the other 70% want a used copy. Consider randomly
selecting 25 purchasers.
a.
What are the mean value and standard deviation of the number who want a
new copy of the book?
b.
What is the probability that the number who want new copies is more than
two standard deviations away from the mean value?
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
This is the end of the preview.
Sign up
to
access the rest of the document.
 Spring '05
 STAFF
 Standard Deviation, Mean, DeVore, market orders copies

Click to edit the document details