Question
Each year an organisation sells an item prior to and during an event. This next year will be the 35th consecutive year that the GTYAA
Each year an organisation sells an item prior to and during an event. This next year will be the 35th consecutive year that the GTYAA has done this and over the years has determined that item demand follows a discrete distribution pattern, summarized in the table below.
HINT: Although this is not normally distributed demand, the same over/under logic used can apply here.
Demand | Probability |
300 | .05 |
400 | .10 |
500 | .40 |
600 | .30 |
700 | .10 |
800 | .05 |
Note that items can only be ordered in lot sizes rounded to the nearest 100. The items cost the organisation $8 each and are sold on the event day for $20. The organisation buys their items from a local supplier who produces them to the organisations specifications. Any unsold item is sold for $5 within a day or so after the race. Assuming the organisation wants to maximize their profits from the sale of these items, how many should the organisation order from the supplier.
- 300
- 400
- 500
- 600
- 700
- 800
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