A newsstand receives Its weekly order of View magazine on Monday and cannot reorder during the week. Each copy costs $1.80 and sells for $3.00.
A newsstand receives Its weekly order of View magazine on Monday and cannot reorder during the week. Each copy costs $1.80 and sells for $3.00. Unsold copies may be returned the following week for a $1.20 rebate. When the newsstand runs out of coples, the owner knows from experience that customers will purchase View magazine elsewhere for an average of two weeks; therefore, the estimated goodwill loss from stock-outs is $2.40 per unsatisfied customer. Demand has been remarkably constant, ranging from 7 to 10 coples per week, as shown below: Demand (in copies) 7 8 9 Probability 9.49 Required: 1-a. Determine the optimal number of coples to keep In Inventory. (Round your answers to 2 decimal places.) Demand (in copies) 7 9 10 EMV 1-b. Determine the expected profit (Round your answer to 2 decimal places.) Expected profit
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance