Chatswood Pty Ltd has to decide how best to use a monthly factory capacity of 1,200 units.

The monthly demand (in units) from regular customers is uncertain as follows:

Monthly demand (in units)

400

500

700

900

Probability

0.1

0.2

0.3

04

Regular customers generate contribution of $5 per unit. The company has the opportunity to enter a special contract which will generate contribution of only $3 per unit. For the special contract, the company must enter a binding contract at a level of 800, 700, 500 and 300 units.

The company has to prepare the following table in order to calculate the contribution (in S) at different levels as follows:

Monthly demand (in units)

Probability

Special contract

(800 units)

400

0.1

500

0.2

Contribution (in $): A

N/A

700

0.3

N/A

900

0.4

N/A

Special contract

(700 units)

Special contract

(500 units)

Special contract

(300 units)

Contribution (in $): B

Contribution (in $): C

N/A

N/A

Contribution Contribution (in $): D

(in $): G

Contribution Contribution (in $): E

(in $): H

Contribution Contribution (in $): F

(in $): I

N/A

Contribution (in $): J

Required

Calculate the contribution (in S) for the figures of A, B, C, D, E, F, G, H, I and J in the above table and the expected values of different levels of special orders. (10 marks)