Kyle store sells K2 skis. The store makes a $200 profit per unit sold during the ski season, but it should take a $50 loss per unit if sold after the season is over. The following discrete probability distribution has been estimated for the season's demand.
$$\begin{array} { | c | c | }
\hline \text { Demand } ( D ) & \text { Demand Probability } \
\hline 10 & 0.1 \
20 & 0.3 \
30 & 0.3 \
40 & 0.2 \
50 & 0.1 \
\hline
\end{array}$$
-Use the information in Scenario D.2.What is the payoff with an order quantity (Q)of 40 units if the demand (D)is 30 units?
A) Less than or equal to $2,000
B) Greater than $2,000 but less than or equal to $4,000
C) Greater than $4,000 but less than or equal to $6,000
D) Greater than $6,000

Question

Kyle store sells K2 skis. The store makes a $200 profit per unit sold during the ski season, but it should take a $50 loss per unit if sold after the season is over. The following discrete probability distribution has been estimated for the season's demand.
 $$\begin{array} { | c | c | } 
\hline \text { Demand } ( D ) & \text { Demand Probability } \
\hline 10 & 0.1 \
20 & 0.3 \
30 & 0.3 \
40 & 0.2 \
50 & 0.1 \
\hline
\end{array}$$
-Use the information in Scenario D.2.What is the payoff with an order quantity (Q)of 40 units if the demand (D)is 30 units?
A) Less than or equal to $2,000
B) Greater than $2,000 but less than or equal to $4,000
C) Greater than $4,000 but less than or equal to $6,000
D) Greater than $6,000

Quizplus · Accepted Answer

The payoff is calculated as follows: Profit from 30 units sold during the season is 30 * $200 = $6,000. The remaining 10 units are sold at a loss of 10 * $50 = $500. Therefore, the total payoff is $6,000 - $500 = $5,500, which falls in the range of greater than $4,000 but less than or equal to $6,000.

Kyle Store Sells K2 Skis -Use the Information in Scenario D