Author Question: The campus bookstore sells highlighters that it purchases by the case. Cost per case, including ... (Read 54 times)

corkyiscool3328 · **on:** Dec 3, 2019

The campus bookstore sells highlighters that it purchases by the case. Cost per case, including shipping and handling, is $200. Revenue per case is $350. Any cases unsold will be discounted and sold at $175. The bookstore has estimated that demand will follow the pattern below

Demand level	Probability
10 cases	20%
11 cases	20%
12 cases	40%
13 cases	15%
14 cases	5%

a. Construct the bookstore's payoff table.
b. How many cases should the bookstore stock in order to maximize profit?
c. How would your answer differ if the clearance price were not $175 per case but $225 per case? (It is not necessary to re-solve the problem to answer this.)

recede · **Reply #1 on:** Dec 3, 2019

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