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Expected Opportunity Loss in Blossom's Flowers

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Blossom's Flowers purchases roses for sale for Valentine's Day. The roses are purchased for $10 a dozen and are sold for $20 a dozen. Any roses not sold on Valentine's Day can be sold for $5 per dozen. The owner will purchase 1 of 3 amounts of roses for Valentine's Day: 100, 200, or 400 dozen roses. Given 0.2, 0.4, and 0.4 are the probabilities for the sale of 100, 200, or 400 dozen roses, respectively, then the EOL for buying 200 dozen roses is

a) $700
b) $900
c) $1,500
d) $1,600

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Solution Summary

The expected opportunity loss in Blossom's Flowers are determined.

Solution Preview

If he stocks 200 units, EOL is given by:

senario that demand is 100:

left over ...

Solution provided by:
Gaurav Agarwal, MS
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
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