Question
Sally's Silk Screening produces specialty T-shirts that are primarily sold at special events. She is trying to decide how many to produce for an upcoming
Sally's Silk Screening produces specialty T-shirts that are primarily sold at special events. She is trying to decide how many to produce for an upcoming event. During the event, Sally can sell T-shirts for $16 apiece. However, when the event ends, any unsold T-shirts are sold for $4 apiece. It costs Sally $10 to make a specialty T-shirt. Sally's estimate of demand is the following:
Demand | Probability |
300 | 0.10 |
400 | 0.20 |
500 | 0.40 |
600 | 0.15 |
700 | 0.10 |
800 | 0.05 |
a) What is the service rate (Please keep two digits after the decimal and don't omit 0 before the decimal, e.g., 0.39)?
b) How many T-shirts should she produce for the upcoming event?
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