Gina starts a new home-based bakery business to sell hand-made toasts and biscuits. Each toast is sold at $6 and costs $2 to make. If she has any unsold toasts after 9 pm, they will be offered at $1 per toast until all remaining toasts are sold. Based on her experience, the daily demand for the toasts can only be 40, 60, 80, 100, or 120. The probabilities for different demand is shown below.

Table 1: Probabilities of Demand for Toasts

Demand 40 60 80 100 120

Probability 15% 25% ? 20% 10%

(a) What is the probability when demand is 80? Calculate the number of toasts Gina should make to maximise the expected profit of selling toasts. If she decides to donate, all the toasts left after 9 pm, to a food bank, for free, how many toasts should she make to maximise the expected profit?

B)

Would you recommend Gina to adopt a pull system to manage its inventory of the flour, one of their main baking ingredient? Explain with supporting reasons.

C)

Discuss how the postponement concept can be applied to Gina's bakery to reduce cycle stocks. State any possible issues that may arise while applying

postponement.