Question
Famous Albert prides himself on being the Cookie King of the West. Small, freshly baked cookies are the specialty of this shop. Famous Albert has
Famous Albert prides himself on being the Cookie King of the West. Small, freshly baked cookies are the specialty of this shop. Famous Albert has asked for help to determine the number of cookies he would make each day. From an analysis of past demand, he estimates demand for fresh cookies as
Demand (dozens) | Probability |
1,800 | 0.05 |
2,000 | 0.10 |
2,200 | 0.20 |
2,400 | 0.30 |
2,600 | 0.20 |
2,800 | 0.10 |
3,000 | 0.05 |
Each dozen sells for $0.69 and costs $0.49, which includes handling and transportation. Cookies that are not sold at the end of the day are reduced to $0.34 and sold the following day as day-old merchandise. a) What is the optimal number of cookies to make?
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