Question

1. The demand for a product of Carolina Industries varies greatly from month to month. Based on the past two years of data, the following shows the monthly demand at Carolina Industries. # Months Unit Demand 300 400 500 600 a. If the company places monthly orders equal to the expected value of the monthly demand, what should Carolina's monthly order quantity be for this product? b. What are the variance and the standard deviation for the number of units demanded? Milito Rodorond micilo dotation au tondanted

Answer 1

Unit Demand	Number of months	Number of month / total number of months
300	4	0.17
400	6	0.25
500	9	0.38
600	5	0.20
Total	24	1

If the company places monthly orders equal to the expected value of the monthly demand, what should Carolina's monthly order quantity be for this product?

Answer -

Unit Demand	Probability	Unit demand x Probability
300	0.17	51
400	0.25	100
500	0.38	190
600	0.20	120
Total		461

Monthly order quantity = 461 units

  

What are the variance and standard deviation for the number of units demanded

Answer -

Unit Demand	Probability	A = Unit demand – Monthly order quantity (calculated in part a)	A square	A square x probability
300	0.17	-161	25,921	4406.57
400	0.25	-61	3721	930.25
500	0.38	39	1521	577.98
600	0.20	139	19,321	3864.2
Total				9779

Variance = 9779

Standard deviation = √Variance

= √9779

Standard deviation = 98.89