An upscale department store must decide on the quantity of


An upscale department store must decide on the quantity of an expensive leather handbag to procure in Italy for the next Christmas season. The unit cost of the handbag to the store is $150 and the handbag will sell for $250. Any handbags not sold by the end of the season are purchased by a discount firm for $100. Suppose the sales of the bags are equally likely to be anywhere from 50 to 200 handbags during the season. a) What is the mean of demand? b) What is the probability that demand is less than 200? c) What is the probability that demand is more than 220? d) What is the optimal order quantity? e) What is the optimal revenue generated by the store?

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