11 The University of Miami bookstore stocks textbooks in preparation for sales each semester. It normally relies on departmental forecasts and preregistration records to determine how many copies of a text are needed. Preregistration shows 90 operations management students enrolled, but bookstore man- ager Vaidy Jayaraman has second thoughts, based on his intuition and some historical evidence. Vaidy believes that the distribution of sales may range from 70 to 90 units, according to the following probability model: Demand Probability 70 75 80 85 90 .15 .30 .30 .20 .05 This textbook costs the bookstore $82 and sells for $112. Any unsold copies can be returned to the publisher, less a restocking fee and shipping, for a net refund of $36. a) Construct the table of conditional profits. b) How many copies should the bookstore stock to achieve high- est expected value? PX
11 The University of Miami bookstore stocks textbooks in preparation for sales each semester. It normally relies on departmental forecasts and preregistration records to determine how many copies of a text are needed. Preregistration shows 90 operations management students enrolled, but bookstore man- ager Vaidy Jayaraman has second thoughts, based on his intuition and some historical evidence. Vaidy believes that the distribution of sales may range from 70 to 90 units, according to the following probability model: Demand Probability 70 75 80 85 90 .15 .30 .30 .20 .05 This textbook costs the bookstore $82 and sells for $112. Any unsold copies can be returned to the publisher, less a restocking fee and shipping, for a net refund of $36. a) Construct the table of conditional profits. b) How many copies should the bookstore stock to achieve high- est expected value? PX
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:11 The University of Miami bookstore stocks textbooks
in preparation for sales each semester. It normally relies on
departmental forecasts and preregistration records to determine
how many copies of a text are needed. Preregistration shows 90
operations management students enrolled, but bookstore man-
ager Vaidy Jayaraman has second thoughts, based on his intuition
and some historical evidence. Vaidy believes that the distribution
of sales may range from 70 to 90 units, according to the following
probability model:
Demand
Probability
70
75
80
85
90
.15
.30
.30
.20
.05
This textbook costs the bookstore $82 and sells for $112. Any
unsold copies can be returned to the publisher, less a restocking
fee and shipping, for a net refund of $36.
a) Construct the table of conditional profits.
b) How many copies should the bookstore stock to achieve high-
est expected value? PX
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