This question is incomplete, the complete question is;
The owner of a small local bakery wants to determine how many fruit-filled pastries she should bake each day. Each pastry costs $.60 to make and sells for $1.00 each. Each pastry that is not sold at the end of the day is sold the next day for $.30 as day-old merchandise. She has determined that her average daily sales of this type of pastry are 193, with a daily standard deviation of 41. Flag this Question Question 114 pts
-What is the value of Co
-What is the value of Cu
Answer:
- the value of the cost overage Co is $ 0.3
- the value of the cost shortage Cu is $ 0.40
Explanation:
Given that;
Revenue per unit R = $ 1.00
Cost per Unit C = $ 0.60
Salvage value per unit S = $ 0.30
Mean Demand μ = 193
Standard Deviation of demand σ = 41
-To get the value of our cost overage Co;
we simply say
Co = Cost per Unit C - Salvage value per unit S
Co = 0.6 - 0.30 = 0.30
therefore the value of the cost overage Co is $ 0.30
- To find the value of Cost Shortage Cu;
Cu = Revenue per unit R - Cost per Unit C
Cu = 1.00 - 0.60 = 0.40
therefore the value of the cost shortage Cu is $ 0.40