The manager of a bakery knows that the number of chocolate cakes he can sell on any given day is a random variable with probability mass function Px (0) = 1/12 Px(1) = 1/12 Px(2) = 3/12 Px(3) = 4/12 Px (4) = 2/12 Px(5) = 1/12 He also knows that there is a profit of $1.00 on each cake that he sells and a loss (due to spoilage) of $0.40 on each cake that he does not sell. Assuming that each cake can be sold only on the day it is made, how many chocolate cakes should he bake to maximize his expected profit
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
The manager of a bakery knows that the number of chocolate cakes he can sell on any given day is a random variable with probability mass function
Px (0) = 1/12
Px(1) = 1/12
Px(2) = 3/12
Px(3) = 4/12
Px (4) = 2/12
Px(5) = 1/12
He also knows that there is a profit of $1.00 on each cake that he sells and a loss (due to spoilage) of $0.40 on each cake that he does not sell. Assuming that each cake can be sold only on the day it is made, how many chocolate cakes should he bake to maximize his expected profit?
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
