Explore BrainMass

Explore BrainMass

    Calculating optimal purchase amount.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    The probability distribution for the demand of a product has been estimated to be:

    Demand Probability of Demand
    0 0.05
    1 0.15
    2 0.30
    3 0.35
    4 0.10
    5 0.05
    6 0.00

    Each unit is purchased for $10 and each unit sells for $50. Unsold units are worthless (no scrap value).

    How many units should be purchased if no reordering is possible?

    © BrainMass Inc. brainmass.com October 2, 2020, 5:26 am ad1c9bdddf


    Solution Summary

    This solution calculates the optimal purchase amount given the probability of demand and no reordering.