Question: Problem 5 (13 points): Marshall Store sells a product with shelf life of only one period. The selling price (or revenue) of the product is

Problem 5 (13 points): Marshall Store sells a
Problem 5 (13 points): Marshall Store sells a product with shelf life of only one period. The selling price (or revenue) of the product is $100/unit and the purchase price (or cost) is $60/unit. Units unsold at the end of the period can be sold back to its supplier at $40/unit. The demand distribution is as shown below. Demand 50 60 70 80 90 100 Probability 0.1 0.15 0.40 0.20 0.10 0.05 a (4 pts.): What are the values of cost of understocking (Cu) and the cost of overstocking (C.)? What is the expected demand per period? Cu = Co- b. (4 pts.): How many units should be purchased at the beginning of the period to maximize the expected profit? c. (5 pts.): Assume that the store 90 units, what is the expected profit? (In answering this part, assume that the store orders 90 units irrespective of your answer in b.)

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