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Abby must plan for her lemonade stand next Saturday. She can stock (lemons, sugar) a small amount (cost = $10) or a large amount (cost
Abby must plan for her lemonade stand next Saturday. She can stock (lemons, sugar) a small amount (cost = $10) or a large amount (cost = $20) of inventory. But the payoff depends on the weather. The revenues are shown below:
| no rain | rain |
stock - small amount | 25 | 20 |
stock - large amount | 45 | 20 |
The probability of raining on the next Saturday is 0.3. Any leftover stock is worthless.
What is the expected value of profit if she stocks a large amount?
(Note: profit = revenue - cost)
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