Orders For Clothing

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rocknmorick

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Nov 4, 2013
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I am drawing a blank. Please help.

Orders for clothing from a particular manufacturer for this year’s Christmas shopping season must be placed in February. The cost per unit for a particular dress is $20 while the anticipated selling price is $50. Demand is projected to be 50, 60, or 70 units. There is a 40 percent chance that demand will be 50 units, a 50 percent chance that demand will be 60 units, and a 10 percent chance that demand will be 70 units. The company believes that any leftover goods will have to be scrapped. How many units should be ordered in February? Provide all three formulas
 
No help out there I guess...?

I'm having a difficult time understanding the concept
 
Last edited by a moderator:
JeffM said:
There is no help out there because no utility function balancing profit versus risk of loss is provided.

Question is meaningless.
Click to expand...

Hm... Well, crud! I have to answer anyways. I guess more google time for me! Oh, the 3 formulas are suppose to be Expected Monetary Value formulas. lol
 
Last edited:
rocknmorick said:
Hm... Well, crud! I have to answer anyways. I guess more google time for me! Oh, the 3 formulas are suppose to be Expected Monetary Value formulas. lol
Click to expand...
Perhaps giving the problem exactly might help. It is possible to calculate maximum expected value. I have no idea what three formulas are in your book or in your class notes.
 
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