The newspaper vending machine at the Food Lion near the corner of Charles Blvd. and Firetower Rd. historically has had a weekday demand of 30 papers 40% of the time, 31 papers 30% of the time, 32 papers 20% of the time and 33 papers 10% of the time.
Papers sell for $0.50 and cost the vendor $0.15 each. Each time a customer arrives to buy a paper and there are none left, the customer is less likely to return to that location resulting in a long-term loss of $0.05. Papers that are not sold have no value.
Build a decision tree and use it to determine the number of papers that the machine should be stocked with each morning so as to maximize EMV (hint: set up the payoff table before drawing the decision tree).