An Introduction to Management Science 13th Edition by David Anderson,Dennis Sweeney ,Thomas Williams ,Jeffrey Camm, Kipp Martin

Exercise 28

The J B Card Shop sells calendars depicting a different Colonial scene each month. The once-a-year order for each year's calendar arrives in September. From past experience, the September-to-July demand for the calendars can be approximated by a normal probability distribution with ? = 500 and ? = 120. The calendars cost $1.50 each, and J B sells them for $3 each.
a. If J B throws out all unsold calendars at the end of July (i.e., salvage value is zero), how many calendars should be ordered?
b. If J B reduces the calendar price to $1 at the end of July and can sell a surplus calendars at this price, how many calendars should be ordered?