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Lakeside Bakery bakes fresh pies every morning. The daily demand for its apple pies is a random variable with (discrete) distribution, based on past experience,
Lakeside Bakery bakes fresh pies every morning. The daily demand for its apple pies is a random variable with (discrete) distribution, based on past experience, given by
Demand | 5 | 10 | 15 | 20 | 25 | 30 | ||||||
Probability | 10 | % | 20 | % | 25 | % | 25 | % | 15 | % | 5 | % |
Each apple pie costs the bakery $6.75 to make and is sold for $17.99. Unsold apple pies at the end of the day are purchased by a nearby soup kitchen for 99 cents each. Assume no goodwill cost.
Based on the demand distribution above, how many apple pies should the company bake each day to maximize its expected profit?
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