AnyLogo supplies firms with apparel containing their logo to be used for promotional purposes. AnyLogo has four major customers—IBM, AT&T, HP, and Cisco. During the holiday season, the logos are adorned with a Christmas motif. Demand from each firm for apparel with the Christmas motif is normally distributed, as shown in Table 13-7.

Table 13-7

AnyLogo currently produces all the apparel including the logo embroidery in Sri Lanka in advance of the holiday season. Each unit costs $15 and is sold by AnyLogo for $50. Any leftover inventory at the end of the holiday season is essentially worthless and cannot be repurposed for a different company. It is thus donated by AnyLogo to charity. Holding the apparel in inventory adds another $3 to the cost per unit donated to inventory. However, the donation allows AnyLogo to recover $6 per unit in tax savings. What production quantities do you recommend for AnyLogo? What is the expected profit from the policy? On average, how much does AnyLogo expect to donate to charity each year?

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Demand Distribution for AnyLogo IBM AT&T HP Cisco 5,000 Mean 7,000 4,000 4,000 2,000 2,500 SD 2,000 2,200