Question

For questions 19 to 20 The Lobo Bookstore sells seasonal mugs to UNM students. The general manager needs to decide how many mugs to order from the supplier in China to satisfy the demand for the upcoming season. The manager buys each mug at unit cost of $1.2 dollars from the supplier and sells the mugs to the UNM students a price of $4.99. At the end of the season, any remaining mug on inventory is sold on a secondary market at a price of $1. Furthermore, based on information from previous seasons, the general manager knows that the demand for seasonal mugs follows a uniform distribution between 120 and 280. Flag question: Question 19

Question 19 1 pts What is the critical ratio (C.R.) for this problem? Group of answer choices 0.25 0.5 0.95 0.75 Flag question:

Question 20 Question 20 2 pts What is the optimal ordering quantity? Group of answer choices 240

Answer 1

The profit-maximizing quantity of output is 4 units.

Step-by-step explanation:

The profit-maximizing quantity of output is the quantity at which marginal revenue (MR) equals marginal cost (MC). In this case, the profit-maximizing quantity is 4 units. At this quantity, the marginal revenue is equal to $184, as shown in the table, and the marginal cost is also $184. Any quantity above or below 4 units would result in lower profits.