For a given perishable product, a retailer pays $5 for each unit, then sells them for $10 each. At the end of the day, units not sold at the store are disposed of, and the retailer receives just $1 for each. Given the following probability distribution describing daily demand, how many units should be stocked? x    Prob. (Demand = x)   x    Prob. (Demand = x)  0     0.01                          7         0.18 1     0.02                          8         0.14 2     0.04                          9         0.09 3      0.07                        10        0.05 4     0.09                         11        0.02 5      0.12                        12        0.01

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Forecasting in Business

Forecasting is the process of predicting the future based on the past and the present data and circumstances. In other words, forecasting is the act of making a detailed analysis of future events based on the decisions made in the past as well as the present. Forecasting plays a very important role in operational management as it helps in planning and decision-making. It is not only important for the success of a business but also contributes to individual growth and success. Many business organizations or companies have failed due to the shortcomings of their forecasting.