Problem:
The probability distribution for the demand of a product has been estimated to be:
Demand Probability of Demand
0 0.05
1 0.15
2 0.30
3 0.35
4 0.10
5 0.05
6 0.00
1.00
Each unit is purchased for $10 and each unit sells for $50. Unsold units are worthless (no scrap value).
How many units should be purchased if no reordering is possible?