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The optimal weekly production of the corsage is? Please show solution

The optimal weekly production of the corsage is? Please show solution

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Sampaguita Company makes corsages that it sells through salespeople on the streets. Each sells for P2 and has variable production costs of P0.80. The salespeople receive a P0.50 commission on each corsage they sell, and the company must spend P0.05 to get rid of each unsold corsage. The corsages last for only one week and cannot be carried in inventory.
The manager of the firm had estimated demand per week and associated probabilities as follows:
Demand         Probability
100,000              0.20
120,000              0.20
140,000              0.30
160,000              0.30

The optimal weekly production of the corsage is? Please show solution.

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