A stockiest wishes to optimize the number of perishable items he needs to stock in any month in his store. The demand distribution for this perishable item is
|
Demand (in units)
|
2
|
3
|
4
|
5
|
|
probability
|
0.10
|
0.35
|
0.35
|
0.20
|
The stockiest pays Rs. 70 for each item and he sells each at Rs. 90. If the stock is left unsold in any month, he can sell the item at Rs. 500 each. There is no penalty for unfulfilled demand. To maximize the expected profit, the optimal stock level is
(a) 5 units (b) 4 units
(c) 3 units (d) 2 units