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
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...
icon
Related questions
Question

solve within 30 minutes.

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
Expert Solution
steps

Step by step

Solved in 3 steps with 3 images

Blurred answer
Similar questions
Recommended textbooks for you
Practical Management Science
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Business in Action
Business in Action
Operations Management
ISBN:
9780135198100
Author:
BOVEE
Publisher:
PEARSON CO
Purchasing and Supply Chain Management
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Production and Operations Analysis, Seventh Editi…
Production and Operations Analysis, Seventh Editi…
Operations Management
ISBN:
9781478623069
Author:
Steven Nahmias, Tava Lennon Olsen
Publisher:
Waveland Press, Inc.