A Newspaper Boy Is Trying to Perfect His Business in Order

question 159

Essay

A newspaper boy is trying to perfect his business in order to maximize the money he can save for a new car. Paper sales are normally distributed, with a mean of 100 and standard deviation of 10. He sells papers for $.5 and pays $.30 for them. Unsold papers are trashed with no salvage value. How many papers should he order each day and what % of the time will he experience a stockout? Are there any drawbacks to the order size proposed and how could the boy address such issues?

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Definitions:

Supply Chain Management

The management of the flow of goods and services, including all processes that transform raw materials into final products.

Functional Barriers

Obstacles arising from the structure and functioning of an organization that hinder communication and cooperation among different departments or units.

Information Competency

The ability to locate, evaluate, and use information effectively, often regarded as an essential skill in the digital age.

Meaningful Data

Information that is relevant, significant, and useful in decision-making processes or in deriving insights.