I'm a bit confused with a practice problem.
An Universities' bookstore stocks textbooks based on departmental forecasts and pre-registration records to determine how many copies are needed. Pre-registration shows 90 students enrolled, but the bookstore manager says that based on his intuition and some historical evidence; he believes that the distribution of sales may range from 70 to 90 according to the following probabability model.
Demand 70 75 80 85 90
Probability .15 .30 .30 .20 .05
The textbook costs the bookstore $82 and sells for $112. Any unsold copies can be returned to the publisher, less a restocking fee and shipping, for a net fund of $36.
1- How can I construct a table of conditional profits?
2- How many copies should the bookstore stock to achieve highest expected value?
THANK YOU IN ADVANCE!
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