1. Suppose that a small candy store makes Valentines Day gift boxes that cost $12 and sell for $18. In the past, at least 40 boxes have been sold by Valentines Day, but the actual amount is uncertain, and in the past, the owner has often run short or made too many. After the holiday, any unsold boxes are discounted 50% and are eventually sold. The net profit is given as follows: net profit = revenue from regular sales + revenue from discounted sales - total cost Use the given model framework to complete the profit calculation in cell B17. What is the profit when demand is 41 and purchase quantity is 44?
2. Using the 2-variable data table, suggest if it is better to understock or overstock in this case.

a. Overstock, the profit remains the same when overstocked while the profit decreases proportionally when understocked.

b. Overstock, its marginal decrease in profit is less than the marginal decrease when understocked.

c. Understock, the marginal increase in cost is less than the marginal increase when overstocked.

d. Uncertain.

e. The same.

f. Understock, the business suffers a loss per unit sold at discount which cannot be offset.

3. Assume demand follows a uniform distribution for range of 40 to 49. What purchase quantity has the highest expected profit?

4. Assume demand follows a probabilty distribution given as follows: 40: 0.01 41: 0.05 42: 0.08 43: 0.12 44: 0.24 45: 0.24 46: 0.12 47: 0.08 48: 0.05 49: 0.01 Now what purchase purchase quantity has the highest expected profit?