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Home Q & A Board Other Fields Homework Help Business Management
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chimeric chimeric
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6 years ago
Orders for clothing from a particular manufacturer for this year's Christmas shopping season must be placed in February. The cost per unit for a particular dress is $20 while the anticipated selling price is $50. Demand is projected to be 50, 60, or 70 units. There is a 40 percent chance that demand will be 50 units, a 50 percent chance that demand will be 60 units, and a 10 percent chance that demand will be 70 units. The company believes that any leftover goods will have to be scrapped. How many units should be ordered in February?
Textbook 
Quantitative Analysis for Management

Quantitative Analysis for Management


Edition: 12th
Authors:
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#1
6 years ago
Payoff Table:


EMV(50) = .4(1500) + .5(1500) + .1(1500) = 1500
EMV(60) = .4(1300) + .5(1800) + .1(1800) = 1600
EMV(70) = .4(1100) + .5(1600) + .1(2100) = 1450

Thus, 60 units should be ordered.
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