Question
The hottest item for Christmas this year is Robosapien V2, a remote-control, programmable robot made by Woo Wee (WW). WW has a wholesale contract with
The hottest item for Christmas this year is Robosapien V2, a remote-control, programmable robot made by Woo Wee (WW). WW has a wholesale contract with The Sharper Image (SI) whereby SI pays a wholesale price of $185 per robot. SI sells it for a price of $250. It costs WW $100 to produce the robot. SI estimates that any robots left-over after Christmas can be sold at a 75% discount off the selling price. SI forecasts that the total holiday demand for the robot will be normally distributed with a mean of 100,000 robots and standard deviation of 60,000 robots. SI has only one opportunity to place an order with WW before the selling season starts. Q1: How many robots should SI order? SI observes that the total holiday demand for the robot will be uniformly distributed between 50,000 robots and 150,000 robots. Q2: How many robots should SI order under the new findings? SI studies the historical data, and conjectures that the total holiday demand has the following probability mass function: Demand Probability 60,000 0.1 80,000 0.1 100,000 0.2 150,000 0.3 180,000 0.15 220,000 0.15 Q3: How many robots should SI order now?