Chip Bilton sells sweatshirts at State U football games. He is equally likely to sell 300 or

Question:

Chip Bilton sells sweatshirts at State U football games. He is equally likely to sell 300 or 600 sweatshirts at each game. Each time Chip places an order, he pays $700 plus $5 for each sweatshirt he orders. Each sweatshirt sells for $9. A holding cost of $3 per shirt (because of the for capital tied in sweatshirts as well as storage costs) is assessed against each shirt left at the end of a game. Assuming that the number of shirts ordered by Chip must be a multiple of 100, determine an ordering policy that maximizes the expected profit earned during the first three games of the season. Assume that any leftover sweatshirts have a value of $6.
Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...