oliday Gift shop places orders for Christmas items during a trade show in July. One item to be

ordered is a dated sterling silver tree ornament. Each ornament costs $$60$ when ordered in July.

The ornaments will sell for $$100.$ Ornaments unsold by Christmas will be on clearance with a

$60\%$ off and always sell during January.

The best estimate for demand is:

Demand $708090100$

Probability $($PDF$)0\mathrm{.}20\mathrm{.}30\mathrm{.}30\mathrm{.}2$

CDF

a$)$ What is the mean demand? $($Hint: sum up all $\backslash$times Pr$(=).)$

b$)$ What is the newsvendor critical ratio?

c$)$ What is the optimal number of ornament Q$*$ to order?

d$)$ What is the expected number of ornaments sold per day if we use the optimal quantity Q$*$

obtained in $($c$)?$

e$)$ What is the expected profit if we use the optimal quantity Q$*$ obtained in $($c$)?$