## Question

###### Store sells Christmas lights. Suppose that the store pays Sl to purchase set of lights: They sell the set for $2. Any set not sold by Christmas will be discounted to $0.5 and sold at this price. Suppose that the probability mass function for the demand D of the Christmas lights is given as: P{D 500} 0.1, P{D 600} 0.2, P{D 700} 0.1 , P{D = 800} = 03, P{D = 900} 0.2_ and P{D = 1000} = 0.1What is the expected demand? What is the expected profit if the store purchases 800 sets of lights? What is th

store sells Christmas lights. Suppose that the store pays Sl to purchase set of lights: They sell the set for $2. Any set not sold by Christmas will be discounted to $0.5 and sold at this price. Suppose that the probability mass function for the demand D of the Christmas lights is given as: P{D 500} 0.1, P{D 600} 0.2, P{D 700} 0.1 , P{D = 800} = 03, P{D = 900} 0.2_ and P{D = 1000} = 0.1 What is the expected demand? What is the expected profit if the store purchases 800 sets of lights? What is the optimal number of lights should the store purchase to maximize its expeeted profit? What is the maximum expected profit?

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