Estimate that the demand for bicycles

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Reference no: EM131987643

Zed and Adrian and run a small bicycle shop called "Z to A Bicycles". They must order bicycles for the coming season. Zed and Adrian estimate that the demand for bicycles this season will be 20, 30, 40, or 50 bicycles with probabilities of 0.2, 0.4, 0.3, and 0.1 respectively. Orders for the bicycles must be placed in quantities of twenty (20). The cost per bicycle is $70 if they order 20, $66 if they order 40, $60 if they order 60. The bicycles will be sold for $78 each if they are not on sale. Any bicycles left over at the end of the season will go on sale and will be sold at $52 each. Create a payoff table that helps Z to A Bicycle decide how many bicycles (20, 40, or 60) to order. Answer the following questions based on the payoff table. How much is the profit of the shop, if they order 40 bicycles and the demand is 20? How much is the profit of the shop, if they order 40 bicycles and the demand is 30? How much is the profit of the shop, if they order 40 bicycles and the demand is 40? How much is the profit of the shop, if they order 40 bicycles and the demand is 50?

Reference no: EM131987643

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