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Degan Routinely Drove the 400-Mile Round Trip to His Favorite

question 24

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Degan routinely drove the 400-mile round trip to his favorite grocery store to stock up on bread, which cost $1.50 per loaf. Running out would be disastrous - an unplanned trip to this store would mean a custom order that would run $7.75 per loaf. Overstocking wasn't a big issue, he could sell it to his teaching partner for $0.10 per loaf. With a demand that is normally distributed with a mean of 125 and standard deviation of 15, what is Degan's optimal purchase quantity on his next trip to the store?


Definitions:

Entrepreneurs

Individuals who initiate, manage, and assume the risks of starting and running a new business venture.

Value Creation

The process of enhancing or producing goods, services, or ideas that have a higher worth to customers or stakeholders than the original cost of inputs.

Linear Process

A sequential process that follows a straight line or step-by-step progression where the output of one step becomes the input of the next step.

Short-Term Perspective

A focus or outlook that emphasizes immediate results, benefits, and consequences, often at the expense of long-term considerations.

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