Consider an item with the following discrete demand distribution for a one-time inventory decision.
$$\begin{array} { | c | c | }
\hline \text { Demand } ( D ) & \text { Demand Probability } \
\hline 10 & 0.15 \
20 & 0.20 \
30 & 0.30 \
40 & 0.20 \
50 & 0.15 \
\hline
\end{array}$$
This item experiences a seasonal demand pattern. A profit of $15 per unit is made if the item is sold in season, but a loss of $10 per unit is incurred if sold after the season is over.
-Use the information in Scenario D.3.What is the payoff when 40 units are ordered but a demand of 30 materializes?
A) $0
B) $100
C) $350
D) $450

Question

Consider an item with the following discrete demand distribution for a one-time inventory decision.
 $$\begin{array} { | c | c | } 
\hline \text { Demand } ( D ) & \text { Demand Probability } \
\hline 10 & 0.15 \
20 & 0.20 \
30 & 0.30 \
40 & 0.20 \
50 & 0.15 \
\hline
\end{array}$$ 
This item experiences a seasonal demand pattern. A profit of $15 per unit is made if the item is sold in season, but a loss of $10 per unit is incurred if sold after the season is over.
-Use the information in Scenario D.3.What is the payoff when 40 units are ordered but a demand of 30 materializes?
A) $0
B) $100
C) $350
D) $450

Quizplus · Accepted Answer

When 40 units are ordered and demand is 30, 30 units are sold in season for a profit of $15 each, totaling $450. The remaining 10 units are sold at a loss of $10 each, totaling a loss of $100. The net payoff is $450 - $100 = $350.

Consider an Item with the Following Discrete Demand Distribution for a One-Time