Homework Soursetees r us which manufactures and sells tshirts for sporting
tees r us, which manufactures and sells t-shirts for sporting events, is providing shirts for an upcoming tournament. each shirt will cost $10 to prpduce and will be sold for $16. any unsold shirts left over at the end of the tournament xan be sold for $5 a piece in the near future. tees R Us assumes the demand for the shirts will be 1000,2000, 3000, or 4000. the company also estimates that the probabilities of each of these sales level occurring will be 15%,25%,30%, and 30%, respectively. determine the expected monetary value of the project if Tees R Us chooses to print 3,000 shirts for the tournament.
Help please show step by step.
tees r us, which manufactures and sells t-shirts for sporting events, is providing shirts for an upcoming tournament. each shirt will cost $10 to prpduce and will be sold for $16. any unsold shirts left over at the end of the tournament xan be sold for $5 a piece in the near future. tees R Us assumes the demand for the shirts will be 1000,2000, 3000, or 4000. the company also estimates that the probabilities of each of these sales level occurring will be 15%,25%,30%, and 30%, respectively. determine the expected monetary value of the project if Tees R Us chooses to print 3,000 shirts for the tournament.
Help please show step by step.
Help please show step by step.
Solution
Hence expected monetary value or monetary gain = +11950
| Demand | 1000 | 2000 | 3000 | 4000 | ||||
| Prob | 0.15 | 0.25 | 0.3 | 0.3 | Sold | unsold | ||
| Total | Shirt cost | 10 | 10 | |||||
| Shirts prd | 3000 | 3000 | 3000 | 3000 | Sales | 16 | 5 | |
| Sold | 1000 | 2000 | 3000 | 4000 | profit | 6 | -5 | |
| Profit | 6000 | 12000 | 18000 | 18000 | ||||
| unsold | 2000 | 1000 | 0 | -1000 | ||||
| Loss for unsold | -10000 | -5000 | 0 | 0 | ||||
| Net gain | -4000 | 7000 | 18000 | 18000 | ||||
| Prob | 0.15 | 0.25 | 0.3 | 0.3 | ||||
| Expected gain | -600 | 1750 | 5400 | 5400 | 11950 |
