Demand for Organic Super Fresh Lettuce in a Local Supermarket

Multiple Choice

Demand for organic super fresh lettuce in a local supermarket is 5 with probability 0.2; 6 with probability 0.3; 7 with probability 0.4 or 8 with probability 0.1. Unsold lettuce is given to a food bank with a salvage value of $1.00 per head of lettuce. Cost of the lettuce is $3.00 per unit. Selling price is $6.00 per unit. Using the single-period model, what is the optimal order quantity in number of units of lettuce the supermarket should use?

A) 7
B) 6
C) 5
D) 8
E) None of these choices are correct