Question

B1: orders for clothing from flowers manufacturing for this year’s National days season must be placed in august the cost per national days dress is $40 while the anticipated selling price is 90$ demand is projected to be 100,110 or 120 units. There is a 30 percent chance that demand will be 100 units , a 50 percent chance that demand will be 110 units , and a 20 percent chance that demand will be 120 units. The company believes that any leftover goods will have to be scarapped

Required: prepare a payoff table , and calculate how many national days dresses should be ordered in auguest

Answer 1

We can see expected profit is highest for ordering quantity = 110 so 110 national days dresses should be ordered

Formula