The local Office of Tourism sells souvenir calendars. Sue, the head of the office, needs to order these calendars in advance of the main tourist season ...

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      The local Office of Tourism sells souvenir calendars. Sue, the   head of the office, needs to order these calendars in advance of the main   tourist season. Based on past seasons, Sue has determined the probability of   selling different quantities of the calendars for a particular tourist   season.   Demand for   Calendars Probability of Demand       75,000 0.15   80,000 0.25   85,000 0.30   90,000 0.20   95,000 0.10       The Office   of Tourism sells the calendars for $12.95 each. The calendars cost Sue $5   each. The salvage value is estimated to be $0.50 per unsold calendar.       Determine   how many calendars Sue should order to maximize expected profits    

    • 8 years ago
    Sue should order 85,000 calendars to maximize the expected profit. The maximum profit will be $641,512.50 ...
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      TheOfficeofTourismsellsthecalendarsfor12.95each.xls