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Potter James is the owner of Potter Patisserie, a pastry shop located just off the historic town square. Business has not been good lately as

Potter James is the owner of Potter Patisserie, a pastry shop located just off the historic town square.

Business has not been good lately as would-be customers frequently leave the store disgruntled when

their preferred pastries are not in stock. At the same time, costs have soared as Potter has had to

dispose of left-over pastries. Potter remembered that you are logistics whiz and decides to ask you for

your help. Potter buys kouign-amanns for $2.25 a piece and resells them for $4.20. Potter likes to sell

fresh pastries, so he throws away any leftovers at the end of the day.

1. Looking at Potters sales records from the last month, you estimate that average daily demand is

62 kouign-amanns with a standard deviation of 14 kouign-amanns.

a. Using excel, please create a column of expected demand and the probabilities of

realizing those demands.

b. Provide a scatter plot with expected demand as the x-axis and probabilities of realizing

those demands on the y-axis.

c. Assume that Potter decides to order 62 kouign-amanns.

i. Estimate the sales for each demand realization

ii. Calculate costs for ordering 62 kouign-amanns

iii. What is the expected profit for each demand realization? What is the total of

those profits?

d. Using solver, find the optimal order quantity of kouign-amanns Potter should order.

What is the total profit?

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