Sally's silk screening produces specialty T-shirts that are primarily sold at special events. She is trying to decide how many to produce for an upcoming event. During the event itself, which lasts one day, Sally can sell T-shirts for $20 a piece. However, when the event ends, half of the unsold T-shirts are sold $4 a piece. It costs Sally $8 to make a specialty T-shirt.
a) Using Sally's estimated demnd that follows, how many T-shirts should she produce for the upcoming event?
Demand probability
300 0.05
400 0.1
500 0.4
600 0.15
700 0.1
800 0.2
b) What is the service leven when optimal decision has been made?