Question

The Fresh Oven Bakery knows that the number of pies it can sell varies from day to day. The owner believes that on 50% of the days she sells 100 pies. On another 25% of the days she sells 150 pies, and she sells 200 pies on the remaining 25% of the days. To make sure she has enough product, the owner bakes 200 pies each day at a cost of $2.50 each. Assume any pies that go unsold are thrown out at the end of the day. If she sells the pies for $3 each, find the probability distribution for her daily profit.

Answer 1

Answer:

Probability     No. of pies          Cost       Revenue      Profit

0.5                        100               500           300            -200

0.25                      150               500           450            -50

0.25                      200              500            600           100

Step-by-step explanation:

We are given that  The owner believes that on 50% of the days she sells 100 pies.

So, Probability of selling 100 pies = 0.5

On another 25% of the days she sells 150 pies

So, Probability of selling 150 pies = 0.25

She sells 200 pies on the remaining 25% of the days

So, Probability of selling 200 pies = 0.25

We are given that the owner bakes 200 pies each day at a cost of $2.50 each.

So, Cost per day =$200 \times 2.50 =500$

Probability     No. of pies          Cost

0.5                        100               500

0.25                      150               500

0.25                      200              500

Now we are given that  she sells the pies for $3 each

So, SP of 100 pies =$3 \times 100 = 300$

SP of 150 pies = $150 \times 3 = 450$

SP of 200 pies = $200 \times 3 = 600$

Probability     No. of pies          Cost       Revenue      Profit

0.5                        100               500           300            -200

0.25                      150               500           450            -50

0.25                      200              500            600           100