Champion Apparel prints up T-shirts commemorating running events, including marathons and 5-K’s. T-shirts cost $2 to make/distribute and sell for $10. Company policy is to dispose of any excess inventory after the event by discounting the T-shirts by 95 percent, that is, sell them for $0.50. Traditionally, all discounted shirts can be rapidly sold at this price.

Suppose T-shirt demand is normally distributed with mean 120 and standard deviation 40. How many T-shirts should Champion Apparel print to maximize expected profit?

Answer rating: 100% (QA)

Total Production of Tshirts5k Cost of Tshirts 2 Selling Price of Tshirts 10 No... View the full answer