The university cafe purchases biscuits every day for $2.5 and sells them for $5. Any unsold biscuits can be sold for $0.5 at the end of the day.

i. For each purchasing and demand option, calculate the profit and loss.

60 20 0.5 Value 1 Value 4 Probability 35 60 Demand 40 0.3 Value 2 Value 5 Purchase 0.2 Value 3 Value 6 Value 1: Value 2: Value 3: Value 4: Value 5: Value 6: ii. Using the expected value approach determine which purchasing option to adapt to achieve the maximum expected profit. Show your workings. Answer both i) and ii) in the text box below- 60 20 0.5 Value 1 Value 4 Probability 35 60 Demand 40 0.3 Value 2 Value 5 Purchase 0.2 Value 3 Value 6 Value 1: Value 2: Value 3: Value 4: Value 5: Value 6: ii. Using the expected value approach determine which purchasing option to adapt to achieve the maximum expected profit. Show your workings. Answer both i) and ii) in the text box below