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Problem 11-8 Lakeside Bakery bakes fresh ples every morning. The daily demand for its apple ples is a random variable with (discrete) distribution, based on
Problem 11-8 Lakeside Bakery bakes fresh ples every morning. The daily demand for its apple ples is a random variable with (discrete) distribution, based on past experience, given by Demand 5 10 15 20 Probability 10% 20% 25% 25% 25 30 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. a. If the company decided to bake 15 apple ples each day, what would be their expected profit? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Expected profit $ 168.60 b. Based on the demand distribution above, how many apple ples should the company bake each day to maximize their expected profit? (Do not interpolate your answer. Choose only from the demand values given in the above discrete distribution.) Number of apple pies 20
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