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An old and experienced professor routinely led student groups on factory in exotic locales, and one popular destination was an island south of Miami. Te students enjoyed this happy little island and the professor liked it because he could supplement his income by bringing back a few boxes souvenirs he could sell to his friends. The souvenirs cost the professor $125 a box and he sells them for $290 a box. Souvenirs that dry out due to age can be sold for $80. Experience has shown that the demand for boxes of these souvenirs has a mean of 60 with a standard deviation of 20. 1) The professor’s suitcase has room for 50 boxes of souvenirs. What is his expected profit? 2) Naturally, the professor will purchase the optimal number of boxes. What is his expected profit purchasing the optimal number of boxes? 3) If professor orders the optimal quantity and each of his friends purchase only one box, how many friends will he turn away because he runs out of boxes of souvenirs? Result the long-run average result.
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