Question: A retailer needs to choose the inventory level for the coming season. The retailer estimates the demand will have a 60% chance to be 30

A retailer needs to choose the inventory level for the coming season. The retailer estimates the demand will have a 60% chance to be 30 and 40% chance to be 20. The ordering cost is $4 for each unit. The retail price is $10. For each unit of surplus inventory, the salvage value is $2. The penalty cost for each unit of unmet demand is $3. There are only two feasible ordering strategy: 25 or 20. Which ordering strategy is more beneficial to the retailer?

PLEASE PROVIDE FULL CALCULATION AND EXPLANATION OF THE CHOSEN ORDERING STRATEGY. THANK YOU!

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