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What is the optimal quantity to buy

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Question - FunSki is a sports store in Leech Lake, Minnesota. Its main sales have been snowmobiles, ice skates, and ski equipment. Recently, the decision was made to sell aqua motorcycles for the summer. Jet skis are purchased for $ 2,000, including shipping, and sell for $ 2,250. Since the lake is far away, only one shipment will be made. A market study indicates that sales follow an exponential distribution with a mean of 50. If FunSki cannot meet the demand, it will incur a cost of $ 250 for the loss of goodwill. By the end of June and into the following summer, aqua motorcycles are unlikely to be sold, so a Fort Lauderdale dealer agrees to purchase all unsold units for $1800 each. It costs $ 50 to ship each jet-ski from Leech Lake to Fort Lauderdale. What is the optimal quantity to buy?

Reference no: EM133073306

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