The Gilbert Air Conditioning Company is considering purchase of a special shipment of portable air conditioners from Japan. Each unit will cost Gilbert $ 80 and be sold for $ 125. Gilbert does not want to carry over surplus air conditioners to the following year. Thus, all surplus units will be sold to a wholesaler who has agreed to take them for $ 50 per unit. Given the probability distribution for air conditioners shown below, recommend an order quantity and the anticipated profit using expected value analysis:
Demand Estimated Probability
0........ .30
1........ .35
2........ .20
3........ .10
4........ .05

  • CreatedAugust 22, 2015
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