A clothing retailer must decide how many boxes of fashion pants to order for the upcoming season. The pants in question come in boxes of 100, 200, and 300, and the retailer has decided to order exactly one of the three types of boxes. Naturally, there is a quantity discount: cach pair of pants in the small box costs $5, in the regular box the price is $4 for a pair, & in the big box it is $3 per pair. Individual orders for pairs are, however, not possible. Demand has been estimated at either 10, 30, 70 or 80 pairs, and the probabilities for these demands are thought to be 0.2, 0.4, 0.3, and 0.1. Pants sell for $10 a pair, and customer demand must be satisfied. In case the store does not have sufficient supplies, they must purchase them from one of their competitors at $13 per pair. Pants left unsold have a salvage value of $1 each. Which of the boxes should be ordered and what is the expected profit? Show all relevant computations.
A clothing retailer must decide how many boxes of fashion pants to order for the upcoming season. The pants in question come in boxes of 100, 200, and 300, and the retailer has decided to order exactly one of the three types of boxes. Naturally, there is a quantity discount: cach pair of pants in the small box costs $5, in the regular box the price is $4 for a pair, & in the big box it is $3 per pair. Individual orders for pairs are, however, not possible. Demand has been estimated at either 10, 30, 70 or 80 pairs, and the probabilities for these demands are thought to be 0.2, 0.4, 0.3, and 0.1. Pants sell for $10 a pair, and customer demand must be satisfied. In case the store does not have sufficient supplies, they must purchase them from one of their competitors at $13 per pair. Pants left unsold have a salvage value of $1 each. Which of the boxes should be ordered and what is the expected profit? Show all relevant computations.
A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
Section: Chapter Questions
Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
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Transcribed Image Text:A clothing retailer must decide how many boxes of fashion pants to order for the upcoming season. The
pants in question come in boxes of 100, 200, and 300, and the retailer has decided to order exactly one of
the three types of boxes. Naturally, there is a quantity discount: each pair of pants in the small box costs
$5, in the regular box the price is $4 for a pair, & in the big box it is $3 per pair. Individual orders for pairs
are, however, not possible. Demand has been estimated at either 10, 30, 70 or 80 pairs, and the probabilities
for these demands are thought to be 0.2, 0.4, 0.3, and 0.1.
Pants sell for $10 a pair, and customer demand must be satisfied. In case the store does not have sufficient
supplies, they must purchase them from one of their competitors at $13 per pair. Pants left unsold have a
salvage value of $1 each. Which of the boxes should be ordered and what is the expected profit? Show all
relevant computations.
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