Assume the following probability distribution of daily demand for bushels of strawberries: Further assume that unit cost

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Assume the following probability distribution of daily demand for bushels of strawberries:

Daily demand Probability 0 0.2 1 0.3 2 0.3 3 0.2

Further assume that unit cost is $3 per bushel, selling price is $5 per bushel, and salvage value on unsold units is $2. We can stock 0, 1, 2, or 3 units. Assume that units from any single day cannot be sold on the next day. Build a decision tree and determine how many units should be stocked each day to maximize net profit over the long haul.

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A First Course In Mathematical Modeling

ISBN: 9781285050904

5th Edition

Authors: Frank R. Giordano, William P. Fox, Steven B. Horton

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