Golf Smart sells a particular brand of drivers for $200 each. During the next year, it estimates
Question:
Golf Smart sells a particular brand of drivers for $200 each. During the next year, it estimates that it will sell 15, 25, 35, or 45 drivers with respective probabilities of 0.35, 0.25, 0.20, and 0.20. It can buy drivers only in lots of 10 from the manufacturer. Batches of 10, 20, 30, 40, and 50 drivers cost $160, $156, $148, $144, and $136 per driver, respectively. Each year, the manufacturer designs a new ``hot'' driver that depreciates the value of last year's driver. Consequently, at the end of every year, Golf Smart has a clearance sale and is able to sell any unsold drivers for $96 each. Assume that any customer who comes in during the year to buy a driver but is unable due to lack of inventory costs Golf Smart $24 in lost goodwill. Determine what decision should be made using game theory.
Step by Step Answer:
A First Course In Mathematical Modeling
ISBN: 9781285050904
5th Edition
Authors: Frank R. Giordano, William P. Fox, Steven B. Horton