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Baker smith runs a bakery in San Pedro that specializes in supersized black forest cupcakes. These cupcakes come with four kinds of frostings: basic buttercream, vanilla, chocolate, and cream cheese. Daily demand for each type of cupcake is independent and is normally distributed, with an estimated mean of 50 and standard deviation of 20. Each customer wants to buy exactly one cupcake. Customers who favor a particular type of frosting will not buy any other if their preferred frosting is out of stock. Each morning, a fresh batch of the cupcakes is prepared for sale that day. Costs to bake and apply frosting to each cupcake are $5. Each cupcake sells for $15. Will Cupcakes competes on the basis of quality, so cupcakes that are unsold by the end of that day are given away. The Owner believes that 60 chocolate-frosted cupcakes will maximize profits. Determine the expected profits that would be realized from sales of these 60 cupcakes

Baker smith runs a bakery in San Pedro that specializes in supersized black forest cupcakes. These cupcakes come with four kinds of frostings: basic buttercream, vanilla, chocolate, and cream cheese. Daily demand for each type of cupcake is independent and is normally distributed, with an estimated mean of 50 and standard deviation of 20. Each customer wants to buy exactly one cupcake. Customers who favor a particular type of frosting will not buy any other if their preferred frosting is out of stock. Each morning, a fresh batch of the cupcakes is prepared for sale that day. Costs to bake and apply frosting to each cupcake are $5. Each cupcake sells for $15. Will Cupcakes competes on the basis of quality, so cupcakes that are unsold by the end of that day are given away. The Owner believes that 60 chocolate-frosted cupcakes will maximize profits. Determine the expected profits that would be realized from sales of these 60 cupcakes

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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Baker smith runs a bakery in San Pedro that specializes in supersized black forest cupcakes. These cupcakes come with four kinds of frostings: basic buttercream, vanilla, chocolate, and cream cheese. Daily demand for each type of cupcake is independent and is normally distributed, with an estimated mean of 50 and standard deviation of 20. Each customer wants to buy exactly one cupcake. Customers who favor a particular type of frosting will not buy any other if their preferred frosting is out of stock. Each morning, a fresh batch of the cupcakes is prepared for sale that day. Costs to bake and apply frosting to each cupcake are $5. Each cupcake sells for $15. Will Cupcakes competes on the basis of quality, so cupcakes that are unsold by the end of that day are given away. The Owner believes that 60 chocolate-frosted cupcakes will maximize profits. Determine the expected profits that would be realized from sales of these 60 cupcakes
Transcribed Image Text:Baker smith runs a bakery in San Pedro that specializes in supersized black forest cupcakes. These cupcakes come with four kinds of frostings: basic buttercream, vanilla, chocolate, and cream cheese. Daily demand for each type of cupcake is independent and is normally distributed, with an estimated mean of 50 and standard deviation of 20. Each customer wants to buy exactly one cupcake. Customers who favor a particular type of frosting will not buy any other if their preferred frosting is out of stock. Each morning, a fresh batch of the cupcakes is prepared for sale that day. Costs to bake and apply frosting to each cupcake are $5. Each cupcake sells for $15. Will Cupcakes competes on the basis of quality, so cupcakes that are unsold by the end of that day are given away. The Owner believes that 60 chocolate-frosted cupcakes will maximize profits. Determine the expected profits that would be realized from sales of these 60 cupcakes
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