Question
Diana is concerned with setting a correct production level.She can produce 500 units or 1100 units.Regardless of production, there is a 45% chance of high
Diana is concerned with setting a correct production level.She can produce 500 units or 1100 units.Regardless of production, there is a 45% chance of high demand (2000 units) and a 35% chance of low demand (350 units) and a 20% chance of average demand (1000 units).Each unit costs $15 to produce and sells for $25.She can only sell the minimum of either demand or production (since she can't sell what she doesn't make and can't sell what isn't demanded).
What is the expected value of profit if you make a decision based on the expected value of profit? Indicate your answer, rounded to two decimal places (i.e. 111.01).
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