Question

A Bakery stocks daily five gourmet fancy fruit-topped cakes. All the cakes that are not sold during the day are thrown away, and the bakery restocks the next day with new cakes, bringing the in-stock level up to five at the beginning of each day. If daily demand is greater than the five cakes in stock the bakery loses sales. The special cake sells for $32 and costs the store $10. The probability distribution of daily demand for the cake is as shown below daily demand - 0, 1,2,3,4,5,6,7 Px - 0.01, 0.02, 0.04, 0.06, 0.20, 0.60, 0.05, 0.02

Answer 1

Answer:

The answer is "$1.98".

Explanation:

calculating the profit per cake $= \ 32 -\ 10 =\ 22$

$\text{if demand}=6 , \ lose =\ 22 \\\\\text{if demand}= 7,\ lose = \ 44$

Calculating E(profit lost):

$=\ 22 \times 0.05+ \ 44 \times 0.02\\\\ =\ 1.1+\ 8.8\\\\=\ 1.98$