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A trucking firm has current capacity of 200,000 cubic feet. A large manufacturer is willing to purchase the entire capacity at $0.10 per cubic foot per day. The manager at the trucking firm has observed that on the spot market, trucking capacity sells for an average of $0.13 per cubic foot per day. Demand, however, is not guaranteed at this price. The manager forecasts daily demand on the spot market to be normally distributed, with a mean of 60,000 cubic feet and a standard deviation of 20,000. How much trucking capacity should the manager save for the spot market?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M91630498

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