Each unit produced costs the company $8.00, and it is sold for $10.00. How much will the company gain or lose in a month if they stock the expected number of units demanded but sell 2000 units?

Question

Business

Ellie Stuart

7 January, 18:27

Each unit produced costs the company $8.00, and it is sold for $10.00. How much will the company gain or lose in a month if they stock the expected number of units demanded but sell 2000 units?

+5

Answers (1)

Know the Answer?

Terrance Sloan · Answer 1

Missing information:

The demand for a product varies from month to month. Based on the past year's data, the following probability distribution shows MNM company's monthly demand.

x f (x)

Unit Demand Probability

0 0.10

1,000 0.10

2,000 0.30

3,000 0.40

4,000 0.10

Answer:

total expected demand = 100 + 600 + 1,200 + 400 = 2,300 units

the company spends 2,300 x $8 = $18,400 to produce the units in stock

the company earns 2,000 x $10 = $20,000 from selling the units

assuming that the remaining units (unsold units) must be discarded and have no value, then the company will earn $20,000 - $18,400 = $1,600