Question 1 (2+2+2+2+2 = 10 points) - Discrete demand for newsvendor model Theodore's gift shop places orders for Christmas items during a trade show in July. One item to be ordered is a dated sterling silver tree ornament. The ornament will sell for $80. The best estimate for demand is: Demand 50 60 70 80 Probability 0.2 0.25 0.3 0.25 (PDF) CDF The ornaments cost $55 when ordered in July. Ornaments unsold by Christmas are marked dow to half retail price and always sell during January. a) What is the mean demand? (Hint: sum up all x*Px(D=x).) b) What is the newsvendor critical ratio? c) What is the optimal number of ornament Q* to order? d) What is the expected number of ornaments sold before Xmas if we use the optimal quantity Q* obtained in (c)? e) What is the expected profit if we use the optimal quantity Q* obtained in (c)