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A bicycle shop plans to offer 2 specially priced children's models at a sidewalk sale. The basic model will return a profit of $110

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A bicycle shop plans to offer 2 specially priced children's models at a sidewalk sale. The basic model will return a profit of $110 and the deluxe model $130. Past experience indicates that sales of the basic model will have a mean of 5.1 bikes with a standard deviation of 1.4, and sales of the deluxe model will have a mean of 3.7 bikes with a standard deviation of 0.7 bikes. The cost of setting up for the sidewalk sale is $400.

tutor

tutor Added an answer on Jul 05,2019

d) Do you need to make any assumptions in calculating the mean?

-- No; no assumptions are made in calculating the mean.

Do you need to make any assumptions in calculating the standard deviation?

-- Yes; the sales must be independent.

tutor

tutor Added an answer on Jul 05,2019

Define the random variables and use them to express the bicycle shop's net profit.

B = number of basic bicycles sold, Upper D equals number of deluxe bicycles sold,
Profit equals 110B plus 130 D minus 400

b) What is the mean of the net profit?

110*5.1 + 130*3.7 - 400 = 642

c. The standard deviation of the distribution

sqrt((110^2 * 1.4^2) + (130^2 *0.7^2)) = 178.88

A bicycle shop plans to offer 2 specially priced children's models at a sidewalk sale. The basic model will return a profit of $110

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