Question: A consumer electronics store stocks five alarm clock radios. If it has fewer than five clock radios available at the end of aweek, the store
A consumer electronics store stocks five alarm clock radios. If it has fewer than five clock radios available at the end of aweek, the store restocks the item to bring thein-stock level up to five. If weekly demand is greater than the five units instock, the store loses sales. The radio sells for $32 and costs the store $18. The manager estimates that the probability distribution of weekly demand for the radio is shown in the provided data table. Complete parts a through d below.
Weekly_Demand Probability
0 0.02
1 0.08
2 0.13
3 0.24
4 0.39
5 0.08
6 0.04
7 0.02
c. What is the expected weekly profit from the sale of the alarm clockradio? (Remember: There are only five
five clock radios available in any week to meetdemand.)
solution> To find the expected weeklyprofit, find the sum of the products of the weekly demandvalues, from 0 to the number of alarm clocks instock, and their respective probabilities. Then multiply the sum by the profit of each alarm clock.
Notice that0, 1,2, 3,4, and 5 are the possible numbers of alarm clock radios that can be sold in one week.
The profit that the store earns for each alarm clock radio sold is the difference between the cost and its selling price. The profit is $14.
Although the expected weekly profit can be found by hand or by usingtechnology, for the purposes of thisexercise, use technology.Therefore, the expected weekly profit is $46.48
-->my question: how to get 46.48? tell me specifically please. especially, i want the whole process of last paragraph calculation.
d. Onaverage, how much profit is lost each week because the radio is not available whendemanded?
Recall that 6 and 7
6and7 alarm clock radios cannot be sold each week. To find the expected weekly profitlost, subtract 5 from the values 6and7. Then multiply the differences by their respective probabilities and find the sum. Then multiply the sum by the profit of each alarm clock radio sold.
Although the expected weekly profit lost can be found by hand or by usingtechnology, for the purposes of thisexercise, use technology.Therefore, the expected weekly profit lost is $1.12 The expected weekly profit lost is $1.12
--> my question: how to get $1.12? tell me specifically please. especially, i want the whole process of last paragraph calculation.
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
