PROBLEM 4: Consider a retail store which sells a perishable good with a life of only one period. At the beginning of each period, the store in anticipation of demand, order Q pounds from a supplier at a cost of $75/lb. The demand is uncertain, but based on historical data; it is normally distributed with mean of 350 and standard deviation of 50. The retail price of this item is $95/lb. In case the demand is less than Q, any unused amount has no salvage value. (a) Use marginal analysis to determine the optimum Q that a supplier should order every period.

For each problem, select the best response. (a) The scores of adults on an IQ test is approximately Normal with mean 100 and standard deviation 15. Corinne scores 118 on such test. Her z-score is about O A. 0.67 OB. 1.2 O C. 7.87 OD. 18 O E. None of the above. (b) A researcher wishes to determine whether the rate of water flow (in liters per second) over an experimental soil bed can be used to predict the amount of soil washed away (in kilograms). In this study, the explanatory variable is the O A. size of the soil bed. O B. rate of water flow. OC. amount of eroded soil. O D. depth of the soil bed. O E. None of the above. (c) Smokers don't live as long (on the average) as nonsmokers, and heavy smokers don't live as long as light smokers. You regress the age at death of a group of male smokers on the number of packs per day they smoked. The slope of your regression line A. will be greater than zero. OB. will be less than zero. OC. must be between 1 and 1. D. can't tell without seeing…

A Scenario: Jimmy store sells large tins of Tom Tucker Coffee. The deli uses a periodic review system. Inventory is checked every 10 days which more orders are needed for tins. Order lead time is 3 days. Average demand is 7 tins, so average demand during the reorder period and order lead time (13) is 91 tins. Standard deviation of demand during the same 13 day period is 17 tins.1. Calculate the restocking level ( Assume the desired level is 90%)2. Suppose standard deviation of demand during the 13-day period drops to 4 tins. What happened to restocking level? Explain why?3. Draw a saw-tooth diagram. Beginning inventory level is equal to restocking level and the demand rate is a constant 7 tins per day. What is the safety stock level? What is the average inventory level?

Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA= 2.0% + 0.40RM + eA RB = -1.8%+ 0.9RM + eB OM = 15%; R-squareA = 0.30; R-squareB = 0.22 What is the standard deviation of each stock? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Stock A Stock B Standard Deviation % %