Construct the bookstore payoff table

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Reference no: EM132191964

The campus bookstore sells highlighters that it purchases. Cost per highlighter, including shipping and handling, is 40 cents. Revenue per highlighter is 85 cents. Any highlighters unsold will be freely given to the kindergarten on the campus. The bookstore has estimated that demand will follow the pattern below. Demand level Probability 600 units 20 percent 700 units 40 percent 800 units 25 percent 900 units 15 percent

a) Construct the bookstore's payoff table.

b) How many cases should the bookstore stock in order to maximize profit?

c) What would the bookstore’s manager be willing to pay for a forecast that would accurately determine the level of demand in the future?

Reference no: EM132191964

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