Question: A style product must be ordered by a store . several months before. the season and can be purchased at $16.25 per unit. The retail

A style product must be ordered by a store . several months before. the season and can be purchased at $16.25 per unit. The retail price for the item will be $26.95 during the season. No “fill-in” stock can be ordered during the season if the store runs out of stock. Any excess stock left at the end of the season will be sold for $14.95.

The buyer estimates the following probability distribution for selling various numbers of the product. Determine the number of dozens to order that will maximize _the store’s expected profit.

NUMBER THAT MAY BE DEMANDED (DOZENS) 7 68899 PROBABILITY OF THIS DEMAND

NUMBER THAT MAY BE DEMANDED (DOZENS) 7 68899 PROBABILITY OF THIS DEMAND NUMBER THAT MAY BE DEMANDED (DOZENS) PROBABILITY OF THIS DEMAND 0.20 0.15 0.03 11 0.05 12 0.07 13 0.07 0.15 14 0.05 10 0.20 15 0.03

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