The local Office of Tourism sells souvenir calendars. Sue, the head of the office, needs to order

Question:

The local Office of Tourism sells souvenir calendars. Sue, the head of the office, needs to order these calendars in advance of the main tourist season. Based on past seasons, Sue has determined the probability of selling different quantities of the calendars for a particular tourist season.

The Office of Tourism sells the calendars for $12.95 each. The calendars cost Sue $5 each. The salvage value is estimated to be $0.50 per unsold calendar. Determine how many calendars Sue should order to maximize expectedprofits.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...