Suppose that Trendy Inc. products a style of a seasonal business suit, Sit-T-Slicker, which has a cost of $500 per unit. The demand during the season for Sit-T-Slicker is generally unknown and could be either: 200, 500, 800, 1100, and 1500 units with equal probabilities. Trendy sells the Sit-T-Slicker suit for $900 per unit during its three-month season, and for $300 per unit when sold after that time.Given the above data, what is the optimal order quantity for the Sit-T-Slicker? What is expected profit?Suppose the probabilities in part a change to 0.05, 0.25, 0.40, 0.25, 0.05 for demand levels 200, 500, 800, 1100, 1500, respectively. What is the optimal order quantity and expected profit in this case?How would better information regarding the demand for the Sit-T-Slicker suit change the data provided in this problem? How would this information affect the answers to part a? Explain.

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Description: Suppose that Trendy Inc. products a style of a seasonal business suit, Sit-T-Slicker, which has a cost of $500 per unit. The demand during the season for Sit-T-Slicker is generally unknown and could be either: 200, 500, 800, 1100, and 1500 units with

The demand of the clothes is 200, 500, 800, 1100 and 1500 with equal probabilities. The cost of the…

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Holt Mcdougal Larson Pre-algebra: Student Edition 2012

1st Edition

ISBN:9780547587776

Author:HOLT MCDOUGAL

Publisher:HOLT MCDOUGAL

Chapter11: Data Analysis And Probability

Section11.9: Independent And Dependent Events

Problem 1E

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Suppose that Trendy Inc. products a style of a seasonal business suit, Sit-T-Slicker, which has a cost of $500 per unit. The demand during the season for Sit-T-Slicker is generally unknown and could be either: 200, 500, 800, 1100, and 1500 units with equal probabilities. Trendy sells the Sit-T-Slicker suit for $900 per unit during its three-month season, and for $300 per unit when sold after that time.

Given the above data, what is the optimal order quantity for the Sit-T-Slicker? What is expected profit?
Suppose the probabilities in part a change to 0.05, 0.25, 0.40, 0.25, 0.05 for demand levels 200, 500, 800, 1100, 1500, respectively. What is the optimal order quantity and expected profit in this case?
How would better information regarding the demand for the Sit-T-Slicker suit change the data provided in this problem? How would this information affect the answers to part a? Explain.

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