4. A furniture manufacturer needs to decide how many units of a particular bookcase to produce next week. Based on the past experience, the probability that the demand will be 5 units is 0.1, for 6 units it is 0.3, and for 7 units it is 0.6. The shortage cost is $30 each and the overstock cost is $10 each. The production manager developed the following decision table to make the best production decision in order to minimize total inventory (shortage and overstock) costs.

Below is the decision table you can fill in. Keep your work for follow-up questions.

Demand

Produce	5	6	7
5
6
7
Probability	0.1	0.3	0.6

PART A

What is the value (in $) you should fill in for the combination of demand=5 and produce=7? Please enter numeric value for answers.

Answer:

5. A furniture manufacturer needs to decide how many units of a particular bookcase to produce next week. Based on the past experience, the probability that the demand will be 5 units is 0.1, for 6 units it is 0.3, and for 7 units it is 0.6. The shortage cost is $30 each and the overstock cost is $10 each. The production manager developed the following decision table to make the best production decision in order to minimize total inventory (shortage and overstock) costs.

Below is the decision table you can fill in. Keep your work for follow-up questions.

Demand

Produce	5	6	7
5
6
7
Probability	0.1	0.3	0.6

PART B

Using the expected monetary value (EMV) criterion, how many bookcases to produce as the best decision? Please enter numeric value for answers.

Answer:

6. A furniture manufacturer needs to decide how many units of a particular bookcase to produce next week. Based on the past experience, the probability that the demand will be 5 units is 0.1, for 6 units it is 0.3, and for 7 units it is 0.6. The shortage cost is $30 each and the overstock cost is $10 each. The production manager developed the following decision table to make the best production decision in order to minimize total inventory (shortage and overstock) costs.

Below is the decision table you can fill in.

Demand

Produce	5	6	7
5
6
7
Probability	0.1	0.3	0.6

PART C

Using the expected monetary value (EMV) criterion, how much is the minimum expected inventory costs given the best decision? Please enter numeric value for answers.

Answer: