Question: The J&B Card Shop sells calendars depicting a different Colonial scene each month. The once-a-year order for each year’s calendar arrives in September. From past experience, the September-to-July demand for the calendars can be approximated by a normal probability distribution with µ = 500 and

σ =120. The calendars cost $1.50 each, and J&B sells them for $3 each.

A.) If J&B throws out all unsold calendars at the end of July (i.e., salvage value is zero), how many calendars should be ordered?

B.) If J&B reduces the calendar price to $1 at the end of July and can sell all surplus calendars at this price, how many calendars should be ordered?