Daily Demand for Fresh Cauliflower in the ZZ-Warehouse Store Follows

question 33

Multiple Choice

Daily demand for fresh cauliflower in the ZZ-Warehouse store follows a normal distribution with a mean of 100 cartons and standard deviation of 20 cartons. The ZZ-Warehouse buys at a cost of $50.00 per carton and sells it for $70.00 per carton. Unsold cartons are sold for $20.00 per carton. What is the optimal order quantity, using the single-period model?

• A) 100
• B) 80
• C) 95
• D) 110
• E) 105

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Definitions:

U-Shaped

A descriptive term for a scenario where performance or conditions decline, then bottom out, and finally improve, thus resembling the letter "U".

Average Variable Cost Curve

A graph that represents the variable costs of production divided by the quantity of output, illustrating how cost changes with changes in output.

U-Shaped

Describing a type of graph or relationship where the values fall, then rise, forming a shape similar to the letter "U".

Short-Run Cost Function

The relationship between the total cost and output when at least one factor of production is fixed.