Consider an Item with the Following Discrete Demand Distribution for a One-Time

question 28

Multiple Choice

Consider an item with the following discrete demand distribution for a one-time inventory decision.
$$\begin{array} { | c | c | } \hline \text { Demand } ( D ) & \text { Demand Probability } \\\hline 10 & 0.15 \\20 & 0.20 \\30 & 0.30 \\40 & 0.20 \\50 & 0.15 \\\hline\end{array}$$
This item experiences a seasonal demand pattern. A profit of $15 per unit is made if the item is sold in season, but a loss of $10 per unit is incurred if sold after the season is over.
-Use the information in Scenario D.3.What is the order quantity with the highest expected payoff?

• A) 20 units
• B) 30 units
• C) 40 units
• D) 50 units

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