Historically demand for roses has never been less than 20

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Reference no: EM13390203

Every morning a florist must decide how many dozens of roses to stock. Roses have a shelf life f only one day, but at the end of the day unsold roses have a salvage value of $2 per dozen. Roses have a wholesale cost of $5 per dozen and a retail value of $19 per dozen. Historically, demand for roses has never been less than 20 dozen and never been in excess of 25 dozen, and demand for roses has been evenly distributed across this range (i.e., the probability of demand's being for 20 dozen is equal to the probability of it's being for 21 dozen, and so on). What is the optimum stocking quantity?

A. We would be indifferent between 22 dozen and 23 dozen

B. Not in excess of 22 dozen

C. 24 dozen

D. 22 dozen

E. Cannot be determined without more information

Reference no: EM13390203

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