Production levels for Akriti's Fashion vary greatly according to consumer acceptance of the latest styles. Therefore, the company's weekly orders of wool cloth are difficult to predict in advance. On the basis of 5 years of data, the following probability distribution for the com- pany's weekly demand for wool has been computed: Amount of wool (kg) 2,500 3,500 4,500 5,500 Probability 0.30 0.45 0.20 0.05 From these data, the raw-materials purchaser computed the expected number of pounds required. Recently, she noticed that the company's sales were lower in the last year than in years before. Extrapolating, she observed that the company will be lucky if its weekly demand averages 2,500 this year. 

(a) What was the expected weekly demand for wool based on the distribution from past data? 

(b) If each pound of wool generates 5 in revenue and costs ₹4 to purchase, ship, and handle, how much would Akriti's Fashion stand to gain or lose each week if it orders wool based on the past expected value and the company's demand is only 2,500?

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a The expected weekly demand for wool can be calculated as the weighted average of the possible ... View the full answer