The owner of a boat has estimated the following distribution of demand for a particular kind of boat. No. demanded o 1 2 3 Probability 0.10 0.20 0.30 0.40 Each boat costs him (c + d) rials and he sells them for (2 • c + 2 • d) rials each. Prices are given in hundreds rial units. Boats that are left unsold at the end of the season must be disposed off for (c + d – 2) rials each. How many should be stocked so as to maximize his expected profit?

Question
The owner of a boat has estimated the following distribution of demand for a particular kind of boat.
No. demanded o
1 2 3
Probability
0.10 0.20 0.30 0.40
Each boat costs him (c + d) rials and he sells them for (2 • c + 2 • d) rials each. Prices are given in hundreds rial
units. Boats that are left unsold at the end of the season must be disposed off for (c + d – 2) rials each. How
many should be stocked so as to maximize his expected profit?
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The owner of a boat has estimated the following distribution of demand for a particular kind of boat. No. demanded o 1 2 3 Probability 0.10 0.20 0.30 0.40 Each boat costs him (c + d) rials and he sells them for (2 • c + 2 • d) rials each. Prices are given in hundreds rial units. Boats that are left unsold at the end of the season must be disposed off for (c + d – 2) rials each. How many should be stocked so as to maximize his expected profit?

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