If demand exceeds the order quantity in a single period situation, then the payoff is simply the order quantity times the per unit profit.

Question

Quizplus · Accepted Answer

In a single period situation, if demand exceeds the order quantity, then the company can sell all the units it has ordered at the selling price, thereby earning a profit equal to the per unit profit multiplied by the order quantity. Therefore, the payoff in this situation would be the order quantity times the per unit profit.

If Demand Exceeds the Order Quantity in a Single Period