Foto Color is a Des Moines supplier of chemicals and equipment used by some photographic stores to process 35mm film. One product that Foto Color supp lies is BC-6. Brad Meyer, president of Foto Color, normally stocks 11, 12, or 13 cases of BC-6 each week. For each case that Brad sells, he receives a profit of $35.
Because BC-6, like many photographic chemicals, has a very short shelf life, if a case is not sold by the end of the week Brad must discard it. Because each case costs Brad $56, he loses $56 for every case that is not sold by the end of the week. There is a probability of 0.45 of selling 11 cases, a probability of 0.35 of selling 12 cases, and a probability of 0.2 of selling 13 cases.
a) What is your recommended course of action?
b) If Brad is able to develop BC-6 with an ingredient that stabilizes BC-6 so it no longer has to be discarded, how would this change your recommended course of action?