The demand for a product varies from month to month. Based on the past year's data, the following probability distribution shows MNMcompany's monthly demand.x F(x) xf(s)Unit Demand Probability0 0.10 0(.10) = .001000 0.10 1000(.10) = 1002000 0.30 2000(.30) = 6003000 0.40 3000(.40) = 12004000 0.10 4000(.10) = 4001.00 2300a. Determine the expected number of units demanded per month.2300b. Each unit produced costs the company $8.00, and is sold for $10.00. How much will the company gain or lose in a month if they stockthe expected number of units dmanded, but sell 2000 units?2300 x 8 18400 $20,000 - $18,400 = 1600 Loss2300 x 10 230002000 x 8 160002000 x 10 20000

2,300 units and $1,600

Step-by-step explanation:

The computation of the expected number of units demanded is shown below:

x                       F(x)                       xf(s)

Unit Demand   Probability

0                        0.10                      0

1000                  0.10                      100

2000                 0.30                      600

3000                 0.40                      1200

4000                 0.10 4000             400

Total                                                2,300

Hence, the expected number of units demanded is 2,300 per month

b. Now the gain or loss is

Since the number of units demanded is 2,300 and its cost is $8 so the total cost is

=

= $18,400

And, the total sales cost is

=

= $20,000

So, the gain is

= $20,000 - $18,400

= $1,600