Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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Suppose that Pizza King and Noble Greek stop
advertising but must determine the price they will charge
for each pizza sold. Pizza King believes that Noble Greek’s
price is a random variable D having the following mass
function: P(D $6) .25, P(D $8) .50, P(D
$10) .25. If Pizza King charges a price p1 and Noble
Greek charges a price p2, Pizza King will sell 100
25( p2 p1) pizzas. It costs Pizza King $4 to make a pizza.
Pizza King is considering charging $5, $6, $7, $8, or $9 for
a pizza. Use each decision criterion of this section to
determine the price that Pizza King should charge.
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