# Sam s Bookstore Objective Determine the quantity of books by lizbethbennett

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```									Sam’s Bookstore Objective Determine the quantity of books to order to maximize expected profit. Variables Input: • Unit cost • Unit price • Sale price for leftovers • Demand quantity Decision: • Order quantity Output: • • • • •

Units sold at regular price Units sold at sale price Total revenue Total cost Profit

Model - see Excel Spreadsheet Analysis Figure 1 below shows how the expected profit varies with the quantity ordered. Order Quantity 500 1000 1500 2000 2500 3000 3500 4000 4500 Expected Profit \$3,000 \$6,750 \$9,500 \$12,250 \$11,375 \$9,500 \$4,875 \$1,350 \$(4,150)

\$14,000 \$12,000 \$10,000 Expected Profit \$8,000 \$6,000 \$4,000 \$2,000 \$0 -\$2,000 0 -\$4,000 -\$6,000 Quantity Ordered
Figure 1: Expected profit vs. Quantity ordered

1000

2000

3000

4000

5000

Recommendations Figure 1 shows that the maximum expected profit is reached when 2000 books are ordered. It is therefore recommended that Sam orders 2000 copies of the book.

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