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A retailer plans to sell two models of earbuds at costs of $250 and 5400.
The $250 model yields a profit of $45 and the $400 model yields a profit of
$50. The retailer estimates that the total monthly demand will not exceed
250 units. Find the number of units each model that should be stocked in
order to maximize profit, given that the retailer is not investing more than
$70,000 in inventory

Answer :

FRANCOCANACARIGO

200 $ 250 earbuds and 50 $ 400 earbuds should be stocked.

Given that a retailer plans to sell two models of earbuds at costs of $ 250 and $ 400, and the $ 250 model yields a profit of $ 45 and the $ 400 model yields a profit of $ 50, and the retailer estimates that the total monthly demand will not exceed 250 units, to find the number of units each model that should be stocked in order to maximize profit, given that the retailer is not investing more than $ 70,000 in inventory, the following calculation should be performed:

  • 250 x 250 + 0 x 400 = 62,500
  • 200 x 250 + 50 x 400 = 70,000

Therefore, 200 $ 250 earbuds and 50 $ 400 earbuds should be stocked.

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