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retownes retownes
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6 years ago
The campus bookstore sells highlighters that it purchases by the case. Cost per case, including shipping and handling, is $200. Revenue per case is $350. Any cases unsold will be discounted and sold at $175. The bookstore has estimated that demand will follow the pattern below

Demand level   Probability
10 cases   20 percent
11 cases   20 percent
12 cases   40 percent
13 cases   15 percent
14 cases   5 percent

a. Construct the bookstore's payoff table.
b. How many cases should the bookstore stock in order to maximize expected profit?
c. How would your answer differ if the clearance price were not $175 per case but $225 per case? (It is not necessary to re-solve the problem to answer this.)
Textbook 
Operations Management

Operations Management


Edition: 10th
Authors:
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kadajikadaji
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6 years ago
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3 years ago
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