Let us suppose you operate a high fashion clothing store. There is a new leather jacket that will be popular for the upcoming selling season. But you cannot reorder due to the long leadtime.
You must place a one time ordering decision. The jacket sells for $60 at your store.
You buy the jacket for $30. You know that if you fail to sell the unit by the end of the season, you can salvage them to a third party for $8.
From past experience, the demand for the jacket has mean 8000 and standard deviation of 1000.