Every four years, Blockbuster Publishers revises its textbooks. It has been thre

Question

Every four years, Blockbuster Publishers revises its
textbooks. It has been three years since the best-selling
book, The Joy of OR, has been revised. At present, 2,000
copies of the book are in stock, and Blockbuster must
determine how many copies of the book should be printed
for the next year. The sales department believes that sales
during the next year are governed by the distribution in
Table 8. Each copy of Joy sold during the next year brings
the publisher $35 in revenues. Any copies left at the end of
the next year cannot be sold at full price but can be sold for
$5 to Bonds Ennoble and Gitano’s bookstores. The cost of
a printing of the book is $50,000 plus $15 per book printed.
How many copies of Joy should be printed? Would the
answer change if 4,000 copies were currently in stock

TABLE 8

Copies Demanded

5,000 6,000 7,000 8,000

Probability

.30 .20 .40 .10

Explanation / Answer

how many copies?

Expected value of copies will be

5000*0.30 + 6000*0.20 + 7000*0.40 + 8000*0.10

6300

Would the
answer change if 4,000 copies were currently in stock

No it would not change because the answer depends more that the distribution of the demand and their probability

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