How many units should the manufacturer produce

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Reference no: EM132223823

Consider a manufacturer of a seasonal good. Based on extensive market research, the manufacturer estimates that demand X for the product will be

X =

200 with probability 0.2

600 with probability 0.3

900 with probability 0.4

1600 with probability 0.1

Suppose that the unit production cost is $50, the unit selling price is $120. In addition, when we reach the end of the selling season, each unsold item can be sold to discount stores at $20. Based on above information, how many units should the manufacturer produce?

Reference no: EM132223823

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