Question

You are responsible for insuring that 5550 finished goods are delivered to the new store in Springfield, MO. However, you are also aware of the following statistics: Expected theft within the warehouse prior to shipping: 0.5% Expected damages as a result of transportation: 1.7% How many finished goods should you begin with so that, even with the theft and damages, you will have at least 5550 items in Springfield, MO?! Your Answer:

Answer 1

5673 finished goods

Explanation:

Given:

Number of finished goods required = 5550

Expected percentage theft within the warehouse prior to shipping = 0.5%

Expected percentage damages as a result of transportation = 1.7%

Now,

Number of Expected theft within the warehouse prior to shipping

=
`(0.5)/(100)*5550`

= 27.75 units ≈ 28

and,

Number of Expected damages as a result of transportation

=
`(1.7)/(100)*5550`

= 94.35 units ≈ 95

thus,

number of units of goods to be extra to begin with = 28 + 95

= 123 units

Hence,

there should be 5550 + 123 = 5673 finished goods so as to counter the theft and damages.