The university book store buys a used text book for a forthcoming semester\'s ma
ID: 1207480 • Letter: T
Question
The university book store buys a used text book for a forthcoming semester's management class. The books purchased are in multiples of the demand shown in the table. Based on the past records, the following information is available. Choose your choices.
Selling price, per unit
$175
Cost, per unit
$85
Salvage
$15.00
Demand (books):
60
120
180
240
Probability:
0.35
0.35
0.20
0.10
order under maximax approach is $180
order minimax approach is not 160
expected value with perfect information (evwpi) is $11,600
expected value with perfect information (evwpi) is not $7,440
expected value of perfect information EOL (evpi) is $1,850
best expected monetary value (emv) is not $8,800
expected value of perfect information EOL (evpi) is $3,630
best expected monetary value (emv) is $7,440
Selling price, per unit
$175
Cost, per unit
$85
Salvage
$15.00
Demand (books):
60
120
180
240
Probability:
0.35
0.35
0.20
0.10
Explanation / Answer
expected value with perfect information (evwpi) is $11,600
revenue d prob. exp. Rev cost exp.cost 10500 60 0.35 3675 5100 1785 21000 120 0.35 7350 10200 3570 31500 180 0.2 6300 15300 3060 42000 240 0.1 4200 20400 2040Related Questions
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