A local retail storemust place orders for Christmas in advance.Assume that each ornament coststhe chain$2.Furthermore,assume that eachornamentcan be sold for a retail price of$8.If the ornamentsare still on the shelves after Christmas,they can be sold at the original cost of $2.The probability distribution of consumer demand for these ornaments(in hundreds)during the upcoming Christmas seasonhas been assessed by the market research specialists and is presented below.Finally,assume that thechain must purchase theornamentsin lots of100units.

Demand(in hundreds) Probability

4 0.50

5 0.30

6 0.20

What is the optimal strategy for order quantity?

a) 400

b) 500

c) 600

d) Both B and C.