Question

In: Finance

Demand for Coca Cola at a local restaurant is 60 bottles per day with a standard deviation of 15 bottles per day.

Demand for Coca Cola at a local restaurant is 60 bottles per day with a standard deviation of 15 bottles per day.

a. Compute the probability that demand will be at most 1700 bottles during the next 28 days.

b. Compute the number of bottles the restaurant should stock to have at most a 9% chance of running out over the next 28 days.

Solutions

Expert Solution

P( X <=1700) = P[ z <= (1700 - 60x28)/15*(28)^.5 = P[ Z <= 0.251976]

Now using function Norm.dist function with mean of 60x28 and SD = 79.39( 15*(28)^.5 ), we find the probability is 0.5997 or 59.97 %

b) We have mean of 1680, SD = 79.375

But we dont know what will be number of bottle for which P { x <= no of Bottle} = .09 = Norm.inv ( Probability, mean, SD) { Using x-cel function we got

X = 1573.5 9 Since, bottle can be in fraction number of bottle can be 1573 or 1574


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