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Each day, Big Boat Flowers, a floral retailer, stocks fresh-cut calla lilies. Each flower costs $0.40 and sells for $1.00. Big Boat Flowers never reduces
- Each day, Big Boat Flowers, a floral retailer, stocks fresh-cut calla lilies. Each flower costs $0.40 and sells for $1.00. Big Boat Flowers never reduces the selling price. At the end of each day, any unsold calla lilies are given to a nearby church. Big Boat Flowers estimates daily demand characteristics as follows:
| Demand (units) | Probability |
| 0 | 5% |
| 100 | 20% |
| 200 | 40% |
| 300 | 25% |
| 400 | 10% |
- How many calla lilies should Big Boat Flowers purchase each day to maximize expected daily operating income?
- What is the maximum amount of money that Big Boat Flowers should be willing to pay for an information system that reveals the exact demand for the day?
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Advanced Accounting
Authors: Paul Fischer, William Taylor
6th Edition
0538841265, 978-0538841269
