Reference no: EM131619288

Question: A store selling Mother's Day cards must decide 6 months in advance on the number of cards to stock. Reordering is not allowed. Cards cost $0.45 and sell for $1.25. Any .cards not sold by Mother's Day go on sale for $0.50 for 2 weeks. However, sales of the remaining cards is probabilistic in nature according to the following distribution: 32% of the time, all cards remaining get sold. 40% of the time, 80% of all cards remaining are sold. 28% of the time, 60% of all cards remaining are sold. Any cards left after 2 weeks are sold for $0.25. The card-shop owner is not sure how many cards can be sold, but thinks it is somewhere (i.e., uniformly distributed) between 200 and 400. Suppose that the card-shop owner decides to order 300 cards. Estimate the expected total profit with an error of at most $5.00.