Question

University of Florida football programs are printed 1 week prior to each home game. Attendance averages 60,000 screaming and loyal Gators fans, of whom two-thirds usually buy the program, following a normal distribution, for $4 each. Unsold programs are sent to a recycling center that pays only 10 cents per program. The standard deviation is 5,000 programs, and the cost to print each program is $2. Refer to the standard normal table for z values.

(a) What is the cost of underestimating demand for each program?
(b) What is the overage cost per program?
(c) How many programs should be ordered per game?
(d) What is the stockout risk for this order size?

Answer 1