# Calculating optimal purchase amount.

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

1.00

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?

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#### Solution Summary

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

$2.19