# solution

A firm sells five types of womenâ€™s parkas. Some data follow.

Parka Price Cost Salvage
 Âµ
s NV Q NV EP
A \$220 167.2 132 1,100 300 1,176 \$47949
B 205 205 127.1 2,000 800 2,269 74,992
C 190 190 121.6 3,000 1,500 3,646 99,815
D 175 175 115.5 2,000 1,200 2,650 59,786
E 160 160 108.8 1,000 700 1,472 27,011

The firm will produce some of the parkas well in advance of the selling season. The
other parkas are produced after a trade show that occurs shortly before the season
starts. After attending the trade show, the firm will basically know the demand for each
parka. Unfortunately the firmâ€™s production capacity is limited after the trade show, so
the firm wants to produce at least 5,000 parkas before the show. Also, each parka
should be produced entirely either before or after the show……they donâ€™t split
production.
a) Before answering the real question above, what would be the firmâ€™s expected profit if
every parka model was produced before the trade show?
Expected Profit = ________________
b) Before answering the real question above, what would be the firmâ€™s expected profit if
every parka model was produced after the trade show?
Expected Profit = ________________

c) What quantity of each parka model should be produced before the trade show to try to
maximize expected profits?
A =__________ B =__________ C =__________ D =__________ E =__________
d) What is the expected total number of parkas the firm will produce after the trade show?
Total Q = ______________
e) What is the firmâ€™s expected profit based on the decisions in c) and d)?
Expected Profit = __________