Sallys Silk Screening produces specialty T-shirts that are primarily sold at special events. She is trying to

Question:

Sally’s Silk Screening produces specialty T-shirts that are primarily sold at special events. She is trying to decide how many to produce for an upcoming event. During the event, Sally can sell T-shirts for $ 20 apiece. However, when the event ends, any unsold T- shirts are sold for $ 4 apiece. It costs Sally $ 8 to make a specialty T-shirt. Sally’s estimate of demand is the following:
Demand Probability
300......0.05
400......0.10
500......0.40
600......0.30
700......0.10
800......0.05
a. What is the service rate (or optimal fractile)?
b. How many T- shirts should she produce for the upcoming event?