In a Single-Period Inventory Situation, the Probabilities That Demand Will

question 49

Multiple Choice

In a single-period inventory situation, the probabilities that demand will be 1, 2, 3, or 4 units are 0.3, 0.3, 0.2, and 0.2, respectively. If two units are stocked, what is the probability of selling both of them?

• A)0.5
• B)0.6
• C)0.7
• D)0.8
• E)0.9

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Definitions:

Isocost Line

A chart displaying every possible input mix that can be acquired for an identical expense.

Total Cost

All expenses a business incurs to produce goods or services, including both fixed and variable components.

Price of Capital

The cost of borrowing money to purchase capital assets or the returns expected by investors for providing capital.

Price of Labor

The compensation received by employees for their work, typically measured as an hourly wage or annual salary.