Units of the new product should be purchased for resale

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Reference no: EM13742906

You are considering adding a new food product to your store for resale. You are certain that, in a month, minimum demand for the product will be 5 units, while maximum demand will be 8 units. (Unfortunately, the new product has a one-month shelf life and is considered to be waste at the end of the month.) You will pay $70/unit for this new product while you plan to sell the product at $100 ($30/unit profit). The estimated demand for this new product in any given month is 5 units (p=0.2) 6 units (p=0.2), 7 units (p=0.4), and 8 units (p=0.2). Using EMV analysis, how many units of the new product should be purchased for resale? Please provide a Pay Off Table.

Reference no: EM13742906

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