Make 8000

Demand
8000
10000
12000
14000
16000
18000

Prob
0.11
0.11
0.275
0.225
0.185
0.095

Revenue
125
1000000
1000000
1000000
1000000
1000000
1000000

Variable
cost 80
640000
640000
640000
640000
640000
640000

Fixed
Cost
100000
100000
100000
100000
100000
100000

Revenue
125
1000000
1250000
1250000
1250000
1250000
1250000

Variable
cost 80
800000
800000
800000
800000
800000
800000

Fixed
Cost
100000
100000
100000
100000
100000
100000

Make 10000
Demand
8000
10000
12000
14000
16000
18000

Prob
0.11
0.11
0.275
0.225
0.185
0.095

Total Expected Profit

Make 12000
Demand
8000
10000
12000
14000
16000
18000

Prob
0.11
0.11
0.275
0.225
0.185
0.095

Revenue
125
1000000
1250000
1500000
1500000
1500000
1500000

Variable
cost 80
960000
960000
960000
960000
960000
960000

Fixed
Cost
100000
100000
100000
100000
100000
100000
Total Expected Profit

Make 14000
Demand
8000
10000
12000
14000
16000
18000

Prob
0.11
0.11
0.275
0.225
0.185
0.095

Revenue
125
1000000
1250000
1500000
1750000
1750000
1750000

Variable
cost 80
1120000
1120000
1120000
1120000
1120000
1120000

Fixed
Cost
100000
100000
100000
100000
100000
100000
Total Expected Profit

Make 16000
Demand
8000
10000
12000
14000
16000
18000

Prob
0.11
0.11
0.275
0.225
0.185
0.095

Revenue
125
1000000
1250000
1500000
1750000
2000000
2000000

Variable
cost 80
1280000
1280000
1280000
1280000
1280000
1280000

Fixed
Cost
100000
100000
100000
100000
100000
100000
Total Expected Profit

Make 18000
Demand
8000
10000
12000
14000
16000
18000

Prob
0.11
0.11
0.275
0.225
0.185
0.095

Revenue
125
1000000
1250000
1500000
1750000
2000000
2250000

Variable
cost 80
1440000
1440000
1440000
1440000
1440000
1440000

Fixed
Cost
100000
100000
100000
100000
100000
100000
Total Expected Profit

Marginal profit= 125-80=45 but marginal loss =80-20=60.Both 9000 and 16000 prodution have same expected profit as seen in the sc
on whether they have to play safe or not.

Salvage
Value 20
0
0
0
0
0
0

Profit
260000
260000
260000
260000
260000
260000

Weighted
Average
28600
28600
71500
58500
48100
24700
260000

Salvage
Value 20
40000

Profit
140000
350000
350000
350000
350000
350000

326900

Total Expected Profit

Salvage
Value 20
80000
40000

Profit
20000
230000
440000
440000
440000
440000

Profit
-100000
110000
320000
530000
530000
530000

Total Expected Profit

Weighted
Average
-11000
12100
88000
119250
98050
50350

order quantity Expected profit

8000
260000
10000
326900
12000
370700
14000
356750

356750

Total Expected Profit

Salvage
Value 20
160000
120000
80000
40000

Weighted
Average
2200
25300
121000
99000
81400
41800
370700

Total Expected Profit

Salvage
Value 20
120000
80000
40000

Weighted
Average
15400
38500
96250
78750
64750
33250

Profit
-220000
-10000
200000
410000
620000
620000

16000
18000

Weighted
Average
-24200
-1100
400000
55000
92250
350000
114700
300000
58900
295550

250000
200000

295550
195500

Expected profit

200000

Salvage
Value 20
200000
160000
120000
80000
40000
Total Expected Profit

150000

Profit
-340000
-130000
80000
290000
500000
710000

Weighted
Average 100000
-37400
50000
-14300
22000
0
0
65250
92500
67450
195500

n have same expected profit as seen in the scatter plot.so which one to choose depends
to play safe or not.

2000

4000

6000

8000

10000

500000
450000
400000
350000

360000
426900
470700
456750

370700
370700
370700
370700

395550
295500

370700
370700

300000
250000
200000
150000
100000

Expected profit

50000
0
6000

8000

10000

12000

10000

12000

14000

16000

18000

20000

12000

14000

16000

18000

20000

Initial Inventory 5000 Swim Suits,

Make 7000 more to have 12000 to sell
Demand

8000
10000
12000
14000
16000
18000

Prob

0.11
0.11
0.275
0.225
0.185
0.095

Revenue
125

1000000
1250000
1500000
1500000
1500000
1500000

Variable
cost 80

560000
560000
560000
560000
560000
560000

Initial Inventory 5000 Swim Suits,

Don't make anything
Demand

8000
10000
12000
14000
16000
18000

Prob

0.11
0.11
0.275
0.225
0.185
0.095

Revenue
125

625000
625000
625000
625000
625000
625000

Variable
cost 80

0
0
0
0
0
0

,
o sell
Fixed
Cost

100000
100000
100000
100000
100000
100000

Salvage
Value 20

80000
40000
0
0
0
0

Profit

420000
630000
840000
840000
840000
840000

Weighted
Average

46200
69300
231000
189000
155400
79800
770700

Total Expected Profit

,
Fixed
Cost

Salvage
Value 20

Profit

0
0
625000
0
0
625000
0
0
625000
0
0
625000
0
0
625000
0
0
625000
Total Expected Profit

Weighted
Average

68750
68750
171875
140625
115625
59375
625000