How much should you order


Question: You are planning to put up a booth at a school fair to sell your favorite drink (lemonade). You plan to sell it at p=$3. A week ahead you need to place your order from a distributor, who gets it from the manufacturer at a cost of c=$1 and sells it to you at w=$2 per unit. You have collected data from past fairs and estimated your demand to be either 1000 units if it rains and the fair has low attendance, which will happen with probability 50%, or 2000 units if the weather is good. a) How much should you order? • A: 1000 units • B: 1500 units • C: 2000 units

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