A Company Sells Its Products to Wholesalers in Batches of 1,000

question 42

Short Answer

A company sells its products to wholesalers in batches of 1,000 units only. The daily demand for its product and the respective probabilities are given below.
$\begin{array}{cc}\text { Demand Units) }&\text { Probability }\\0 & 0.2 \\1000 & 0.2 \\2000 & 0.3 \\3000 & 0.2 \\4000 & 0.1\end{array}$
a. Determine the expected daily demand.
b. Assume that the company sells its product at $3.75 per unit. What is the expected daily revenue?

---

Definitions:

Maturity

The specific day when the core sum of a financial product, like a bond or loan, must be paid back to the investor.

Semiannually

Occurring twice a year; every six months.

Zero-coupon Bond

A type of bond that does not pay interest during its life; it is sold at a discount from its face value and the return is realized when the bond matures.

Deep Discount

A situation where a bond or other investment is sold significantly below its par or face value.