A retail store purchases computer software from a distributor for resale. For an upcoming promotion, the retailer needs to determine the best order size for a one-time purchase. One of the products is a word processing software program that will have a special sale price of $350. The retailer estimates the probabilities for selling various quantities as follows:
Quantity Probability
50.....................0.10
55.....................0.20
60.....................0.20
65.....................0.30
70 .....................0.15
75 *.....................0.05
.....................1.00
The program can be purchased from the distributor for $250 each, but there is a restocking charge of 20 percent of the purchase price for the return to the distributor of any unsold programs. What size of a purchase order should the retailer commit to?