Question

Before the summer season begins, you need to decide how many postcards to stock in your shop. Historically, the number of postcards you sell during the summer season has approximately a normal distribution with mean 50 and standard deviation 7 (in thousands of postcards). If you want to be approximately 80% sure that you can meet demand, how many postcards should you stock

Answer 1

You should stock 59 thousands of postcards

Explanation:

In the standard normal distribution table, you want to find the Z with probability 0.4, which is (see figure attached) 1.28. Z is calculated as follows:

Z = (x - μ)/σ

where μ is the mean and σ is the standard deviation. Replacing with data:

1.28 = (x - 50)/7

x = 1.28*7 + 50 = 59 thousands of postcards

So, approximately 80% of the demand would be satisfied with a number of postcards between 41000 and 59000 (notice the curve is symmetrical).