How many newspapers should the newsstand operator order to ensure that he runs short on no more than 20% of days?
The demand for a daily newspaper at a newsstand at a busy intersection is known to be normally distributed with a mean of 150 and a standard deviation of 25.
The demand for a normal newspaper at a newsstand has a mean of 150 and a standard deviation of 25. As the demand is normally distributed a normal table can be used.
The papers can run short on a maximum 20% of days.
Using the table given below, the z-score for 0.8 is 0.84
0.84 = (N - 150)/25
=> N = 171
The newspaper vendor should order a minimum 171 newspapers to ensure that he runs low on no more than 20% of the days.