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The Campus Bookstore Sells Stadium Blankets Embroidered with the University

Question 97

Essay

The campus bookstore sells stadium blankets embroidered with the university crest. The blankets must be purchased in bundles of one dozen each. Each blanket in the bundle costs $65, and will sell for $90. Blankets unsold by homecoming will be clearance priced at $20. The bookstore estimates that demand patterns will follow the table below.
a. Build the decision table.
b. What is the maximum expected value?
c. How many bundles should be purchased?
 Demand level  Probability 1 bundle 10 percent 2 bundles 30 percent 3 bundles 50 percent 4 bundles 10 percent \begin{array} { | l | l | } \hline \text { Demand level } & \text { Probability } \\\hline 1 \text { bundle } & 10 \text { percent } \\\hline 2 \text { bundles } & 30 \text { percent } \\\hline 3 \text { bundles } & 50 \text { percent } \\\hline 4 \text { bundles } & 10 \text { percent } \\\hline\end{array}

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(a) See the table below; (b) t...

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