A product is priced to sell at $ 100 per unit and its cost is constant at $70 per unit. Each unsold unit has a salvage value of $20. Demand is expected to range between 35 and 40 units for the period. 35 definitely can be sold and no units over 40 will be sold. The demand probabilities and the associated cumulative probability distribution (P) for this situation are shown below.

How many units should be ordered?

Number of units demanded 35 36 37 38 39 40 Probability of this demand 0.10 0.15 0.25 0.25 0.15 0.10 Cumulative probability 0.10 0.25 0.50 0.75 0.90 1.00