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Rudolph's Balsam Firs is based out of Waterloo, Nova Scotia. They are in the business of selling genetically engineered miniature Christmas trees. These trees
Rudolph's Balsam Firs is based out of Waterloo, Nova Scotia. They are in the business of selling genetically engineered miniature Christmas trees. These trees are 1.5 feet tall and take about 8 months to grow to that height. Rudolph estimates his cost for growing each tree is $3 whereas his selling price is $30. At the end of the season, leftover trees are sold to a nursery that is willing to pay $1.50 per tree. It is currently March, and his demand forecast distribution is given in Figure 1, which has the mean of 2400 trees. Probability 5% 70% 1800 2000 2200 2400 2600 2800 3000 Demand for Christmas Trees Figure 1 If Rudolph decides to grow 3000 trees, what is pros and cons for this decision to his business, compared to growing only 1800 trees? What is the expected profit for Rudolph if he grows 3000 trees? Compute the optimal number of trees to plant and grow.
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