Production run for event where the attendance

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Reference no: EM134044833

Ordering T-shirts

A T-shirt company is planning a production run for an event where the attendance (and thus demand for T-shirts) is uncertain. The company must pre-order the blank T-shirts (cost = $6 per shirt) and it can sell finished T-shirts for $15 apiece. Any finished T-shirts that cannot be sold at the event can be sold for $3 apiece to a used clothing vendor.

1. Create below a spreadsheet model of this problem if demand is 750 T-shirts and order quantity is 1000 T-shirts.

2. The event planners think the attendance will be 500, 750, 1000, or 1250 with probabilities of 15%, 35%, 35%, and 15%, respectively. Determine the order quantity that maximizes the expected profit. Use Two-way Data Table, Sumproduct, and conditional formating. Hint: Try order quantities 500, 750, 1000, or 1250.

Reference no: EM134044833

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