Bigby Riggs sells high-end art frames that are ordered every Thursday to prepare for next week's demand.  The most popular frame style is sold at $50 per unit and it costs Bigby $35 per piece.  If too many art frames are ordered, Bigby incurs an inventory carrying cost of $2 per frame. If Bigby runs out of stock for the week, he forgoes the profits from missed sales.  Bigby has the option to order 100, 150, or 200 art frames to meet next week's demand which can be either 100, 150, or 200 frames. Based on historical demand, Bigby has determined the following probability information: P(100) = 0.4, P(150) = 0.3, P(200) = 0.3 What is the Expected Monetary Value of your best alternative?

Practical Management Science
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Chapter2: Introduction To Spreadsheet Modeling
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Bigby Riggs sells high-end art frames that are ordered every Thursday to prepare for next week's demand.  The most popular frame style is sold at $50 per unit and it costs Bigby $35 per piece.  If too many art frames are ordered, Bigby incurs an inventory carrying cost of $2 per frame. If Bigby runs out of stock for the week, he forgoes the profits from missed sales.  Bigby has the option to order 100, 150, or 200 art frames to meet next week's demand which can be either 100, 150, or 200 frames.

Based on historical demand, Bigby has determined the following probability information:

P(100) = 0.4, P(150) = 0.3, P(200) = 0.3

What is the Expected Monetary Value of your best alternative?

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