You want to determine how many bunches of radishes you want to buy each day. Here's what you know.
1. You sell radishes (the sale price) for a dollar a bunch.
2. You purchase radishes (the cost price) for 50 cents a bunch to sell
3. A farmer will purchase the old radishes for a dime a bunch to grind up for his farm animals.
4. You sell about 20 bunches a day.
5. The standard deviation (that give and take of how many you sell every day...some days 17, some days 25, some days 19) is 3.
So, you'll want to know based on the above, how many bunches your next order should be. (50 points).
First, find the cost per unit or sale price minus cost price = C(u)
Second, find the difference of the cost price minus the price the famer will pay = C(o)
Third, find the purchase requirements by doing these steps:
a. C(u)/C(o) +C(u) = P (only go out to four decimal places) (HINT: This must be less than one -add the denominator, then divide - if it's greater than one - you've got the division wrong...if you are banging your head against the wall...it's time to call Dr. Fenner)
b. go to this calculator to find the normsinv (probability value) (http://easycalculation.com/statistics/inverse-cumulative-normal-standard-distribution.php). Put the number you got for a. (probability) in the top box, hit calculate and then a number will appear in the normsinv (remember this number)
c. Then calculate the purchase by: number of bunches you sell now (number 4 above) plus Probability Value (the normsinv number from b. above) times your standard deviation (number 5 above) or
Sales + (Probability Value (the normsinv number) times Standard Deviation)
(Hint: notice the distribution: calculate Probability Value x Standard Deviation and then add this number to current sales)
HINT: Watch your decimal places!