A company has identified three possible scenarios for the demand for its product over the next year.
Fantastic news! We've Found the answer you've been seeking!
Question:
A company has identified three possible scenarios for the demand for its product over the next year. Scenario 1 has a 40% chance of occurring and would result in demand of 1,000 units. Scenario 2 has a 30% chance of occurring and would result in demand of 2,000 units. Scenario 3 has a 30% chance of occurring and would result in demand of 3,000 units. The company can produce the product at a cost of $10 per unit and sell it for $20 per unit. However, if the demand exceeds its production capacity, it will have to purchase additional units from a supplier at a cost of $15 per unit. What is the expected profit for the company, and what is the standard deviation of the distribution of possible profits?
Related Book For
Posted Date: