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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) 12 Px(1) = Px(2) %3D Px(3) %3D Px(4) = 12 %3D Px(5) = 2 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? II

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) 12 Px(1) = Px(2) %3D Px(3) %3D Px(4) = 12 %3D Px(5) = 2 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? II

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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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) = Px(1) = 12 Px(2) 4 Px(3) %3D 12 2 Px(4) %3D 12 Px(5) = 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? II
Transcribed Image Text: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) = Px(1) = 12 Px(2) 4 Px(3) %3D 12 2 Px(4) %3D 12 Px(5) = 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? II
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