The Steak and Chop Butcher Shop purchases steak from a local meatpacking house. The meat is purchased on Monday at $2.00 per pound, and the shop sells the steak for $3.00 per pound. Any steak left over at the end of the week is sold to a local zoo for $.50 per pound. The possible demands for steak and the probability of each are shown in the following table:
Demand (lb.) ...... Probability
20 ......... .10
21 ........ .20
22 ....... .30
23 ........ .30
24 ........ .10
The shop must decide how much steak to order in a week. Construct a payoff table for this decision situation and determine the amount of steak that should be ordered, using expected value.

  • CreatedJuly 17, 2014
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