2 5-16. A consumer electronics store stocks four alarm clock radios. If it has fewer than four clockradios available at the end of a week, the store restocks the item to bring the in-stock level up tofour. If weekly demand is greater than the four units in stock, the store loses sales. The radio sellsfor $25 and costs the store $15. The manager estimates that the probability distribution of weeklydemand for the radio is as follows:Weekly DemandProbability0.0510.0520.100.2040.400.106.0.050.05a. What is the expected weekly demand for the alarm clock radio?b. What is the probability that weekly demand will be greater than the number of availableradios?c. What is the expected weekly profit from the sale of the alarm clock radio? (Remember:There are only four clock radios available in any week to meet demand.)d. On average, how much profit is lost each week because the radio is not available whendemanded?

5-16. A consumer electronics store stocks four alarm clock radios. If it has fewer than four clock radios available at the end of a week, the store restocks the item to bring the in-stock level up to four. If weekly demand is greater than the four units in stock, the store loses sales. The radio sells for $25 and costs the store $15. The manager estimates that the probability distribution of weekly demand for the radio is as follows: Weekly Demand Probability 0.05 0.05 2 0.10 0.20 1.

5-16. A consumer electronics store stocks four alarm clock radios. If it has fewer than four clock radios available at the end of a week, the store restocks the item to bring the in-stock level up to four. If weekly demand is greater than the four units in stock, the store loses sales. The radio sells for $25 and costs the store $15. The manager estimates that the probability distribution of weekly demand for the radio is as follows: Weekly Demand Probability 0.05 0.05 2 0.10 0.20 1.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter17: Making Decisions With Uncertainty

Section: Chapter Questions

Problem 2MC

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