A camera manufacturer produces two models (standard and deluxe). In preparation for the heavy Christmas selling...

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A camera manufacturer produces two models (standard and deluxe). In preparation for the heavy Christmas selling season, production volumes must be determined. The variable cost of the standard camera is $10, and the selling price is $20; the variable cost of the deluxe model is $20, and the selling price is $35. Demand is estimated as follows: Standard Model Deluxe Model Demand Probability Demand Probability 6,000 8,000 0.30 0.70 2,000 4,000 0.20 0.80 Any cameras not sold during the Christmas season are sold at a salvage price of $5 for the standard and $10 for the deluxe model. The manufacturer thinks that different segments of the market purchase the two different models; thus, the probabilities of sales above are independent. Suppose production capacity is unlimited. Then the two decisions can be made independently. What are the optimal quantities of each model to produce? A camera manufacturer produces two models (standard and deluxe). In preparation for the heavy Christmas selling season, production volumes must be determined. The variable cost of the standard camera is $10, and the selling price is $20; the variable cost of the deluxe model is $20, and the selling price is $35. Demand is estimated as follows: Standard Model Deluxe Model Demand Probability Demand Probability 6,000 8,000 0.30 0.70 2,000 4,000 0.20 0.80 Any cameras not sold during the Christmas season are sold at a salvage price of $5 for the standard and $10 for the deluxe model. The manufacturer thinks that different segments of the market purchase the two different models; thus, the probabilities of sales above are independent. Suppose production capacity is unlimited. Then the two decisions can be made independently. What are the optimal quantities of each model to produce?