What is the firms expected profit

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Reference no: EM131351921

A firm sells five women's ski parkas. Some data on those parkas are listed below:

Parka	Price	μ	σ	C₀	C_u	Q	Expected Profit
A	$220	1,000	300	35.2	52.8	1,202	$41,740
B	205	2,000	800	28.7	49.2	2,540	73,618
C	190	3,000	1500	22.8	45.6	4,012	98,429
D	175	2,000	1200	17.5	42.0	2,809	59,186
E	160	1,000	700	12.8	38.4	1,472	27,011

Q in the above table is the optimal newsvendor quantity and "Expected Profit" is the news-vendor expected profit if Q is ordered. The firm will produce some parkas well in advance of the selling season. The other parkas are produced after a trade show that occurs shortly before the season starts. After attending the trade show, the firm will basically know demand for each parka. Unfortunately, the firm's capacity is limited after the trade show, so the firm wants to produce at least 5,000 parkas before the trade show. Furthermore, a parka should be produced either before the trade show or after the trade show, but a parka should not be produced in both production opportunities.

a. What is the firm's expected profit if every parka is produced before the trade show?

b. What is the firm's expected profit if every parka is produced after the trade show?

c. What should the production quantities before the trade show be for each parka?

d. What is the expected number of units the firm will produce after the trade show? (Assume that there is sufficient after-trade show capacity given the before-trade show order.)

e. What is the firm's expected profit?

Reference no: EM131351921

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