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The university of Dallas Bookstore stocks textbooks in preparation for sales each semester. It normally relies on departmental forecast and preregistration resords to determine how many copies of a text are needed. Preregistration show 90 operations management students enrolled, but bookstore manager Curtis Ketterman has second thoughts, based on his intuition and some historical evidence. Curtis beleives that the distribution of sales may range from 70 to 90 units, according to the following probability model.
Demand 70 75 80 85 90
Probability 0.05 0.30 0.30 0.20 0.15
This textbook costs the bookstore $70 and sells for $100. Any unsold copies can be returned to the publisher, less a restocking fee and shipping for a net refund of $30.
a) Based on the given information, Vaidy's conditional profits table for the bookstore is:
Demand
70 75 80 85 90
Stock p=0.05 p=0.30 p=0.30 p=0.20 p=0.15
70 ____ _____ ______ ______ ______
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