Recommend an order quantity and the anticipated profit

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Reference no: EM131177590

The Gilbert Air Conditioning Company is considering purchase of a special shipment of portable air conditioners from Japan. Each unit will cost Gilbert $80 and be sold for $125. Gilbert does not want to carry over surplus air conditioners to the following year.

Thus, all surplus units will be sold to a wholesaler who has agreed to take them for $50 per unit. Given the probability distribution for air conditioners shown below, recommend an order quantity and the anticipated profit using expected value analysis:

Demand	Estimated Probability
0	.30
1	.35
2	.20
3	.10
4	.05

Reference no: EM131177590

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