Answered: A pastry shop is considering how much…

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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3. A pastry shop is considering how much hot chocolate to prepare each morning. Hot chocolate costs $0.10 per oz to make and sells for $0.40 per oz. Customers can buy hot chocolate in any number of ounces that they wish. Any hot chocolate not sold by the end of the day is discarded. The daily demand for hot chocolate is normally distributed with a mean of 1,200 oz and a standard deviation of 150 oz. How much hot chocolate should the pastry shop make each morning? You may use a z-table for this question.

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

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