14 The daily demand for a particular type of printed circuit board in an assembly shop can...

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14 The daily demand for a particular type of printed circuit board in an assembly shop can as- sume one of the following values: 100, 120 or 130 with probabilities 0.2, 0.3 and 0.5. The manager of the shop thus is limiting her alternatives to stocking one of the three levels in- dicated. If she prepares more boards than are needed in the same day, then she must re- process those remaining at a cost price of 55 cents/board. Assuming that it costs 60 cents to prepare a board for assembly and that each board produces $1.05 in revenue, find the optimal stocking level by using a decision tree model.

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