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Lakeside Bakery bakes fresh pies every morning. The daily demand for its apple pies is a random variable with (discrete) distribution, based on past experience, given by Demand 5 10 15 20 25 30 Probability 10% 20% 25% 25% 15% 5% Each apple pie costs the bakery $6.75 to make and is sold for $37.99. Unsold apple pies at the end of the day are purchased by a nearby soup kitchen for 99 cents each. Assume no goodwill cost. a. If the company decided to bake 15 apple pies each day, what would be their expected profit? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Expected profit b. Based on the demand distribution above, how many apple pies should the company bake each day to maximize their expected profit? Number of apple pies $

Lakeside Bakery bakes fresh pies every morning. The daily demand for its apple pies is a random variable with (discrete) distribution, based on past experience, given by Demand 5 10 15 20 25 30 Probability 10% 20% 25% 25% 15% 5% Each apple pie costs the bakery $6.75 to make and is sold for $37.99. Unsold apple pies at the end of the day are purchased by a nearby soup kitchen for 99 cents each. Assume no goodwill cost. a. If the company decided to bake 15 apple pies each day, what would be their expected profit? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Expected profit b. Based on the demand distribution above, how many apple pies should the company bake each day to maximize their expected profit? Number of apple pies $

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Lakeside Bakery bakes fresh pies every morning. The daily demand for its apple pies is a random variable with (discrete) distribution, based on past experience, given by Demand 5 10 15 20 25 30 Probability 10% 20% 25% 25% 15% 5% Each apple pie costs the bakery $6.75 to make and is sold for $37.99. Unsold apple pies at the end of the day are purchased by a nearby soup kitchen for 99 cents each. Assume no goodwill cost. a. If the company decided to bake 15 apple pies each day, what would be their expected profit? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Expected profit b. Based on the demand distribution above, how many apple pies should the company bake each day to maximize their expected profit? Number of apple pies
Transcribed Image Text:Lakeside Bakery bakes fresh pies every morning. The daily demand for its apple pies is a random variable with (discrete) distribution, based on past experience, given by Demand 5 10 15 20 25 30 Probability 10% 20% 25% 25% 15% 5% Each apple pie costs the bakery $6.75 to make and is sold for $37.99. Unsold apple pies at the end of the day are purchased by a nearby soup kitchen for 99 cents each. Assume no goodwill cost. a. If the company decided to bake 15 apple pies each day, what would be their expected profit? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Expected profit b. Based on the demand distribution above, how many apple pies should the company bake each day to maximize their expected profit? Number of apple pies
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