Question: Question 9:

As owner of Catch-of-the-day Fish Shop, you can purchase fresh fish at $18 per crate each morning from the Walton Fish Market. During the day, you sell crates of fish to local restaurants for $120 each. Coupled with the perishable nature of your product, your integrity as a quality supplier requires you to dispose of each unsold crate at the end of the day. Your cost of disposal is $2 per crate. You have a problem, however, because you do not know how many crates your customers will order each day. To address this problem, you have collected several days’ worth of demand data shown below. You need to use this data to determine the optimal number of crates you should purchase each morning.

Note that the “cost of disposal” is like a salvage value of (-$2). In other words, the owner has to pay someone $2 to take an old crate away.