Intel advised HP that it is going to stop producing the Celeron 420, which HP uses for its low-end notebooks. HP estimates the lifetime demand for the 420 computers (including spare parts) to be N(25,5) (in thousands of units). Assume that the notebooks gross margins are $100, and that the cost of the Celeron is $200

1.What is HPs underage cost?

a. $200, b. $100, c. $300, d. $50, e. $0

2.What is HPs overage cost?

a. $200, b. $100, c. $300, d. $50, e. $0

HP estimates the lifetime demand for the 420 computers (including spare parts) to be N(25,5) (in thousands of units). Assume that the notebooks gross margins are $100, and that the cost of the Celeron is $200.

3.How many units should HP order to maximize its expected profit?

a. 20k, b. 23k, c. 25k, d. 27k, e. 30k

4.If the mean of the demand estimation doubles to 50k, HPs order should

a. double, b. more than double, c. less than double, d. no change