Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The demand for a product of a company varies greatly from month to month. The probability distribution in the following table, based on the past

The demand for a product of a company varies greatly from month to month. The probability distribution in the following table, based on the past 2 years of data, shows the company's monthly demand:

Unit demand 300 400 500 600
Probability 0.20 0.30 0.35 0.15

(i) If the company bases monthly orders on the expected value of the monthly demand, what should the monthly order quantity be for this product? (ii) Assume that each unit demanded generates Tk.70 in revenue and that each unit ordered costs Tk.50. How much will the company gain or loss in a month if it places an order based on your answer to part (i) and the actual demand for the item is 300 units?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Trigonometry

Authors: Mark Dugopolski

3rd Edition

0321899830, 9780321899835

More Books

Students also viewed these Mathematics questions