Bev’s Bakery specializes in sourdough bread. Early each morning, Bev must decide how many loaves to bake for the day. Each loaf costs $ 1.25 to make and sells for $ 3.50. Bread left over at the end of the day can be sold the next day for $ 1.00. Past data indicate that demand is distributed as follows:

a. Construct a payoff table and determine the optimal quantity for Bev to bake each morning using expected values.
b. What is the optimal quantity for Bev to bake if the unsold loaves are sold the next day but are donated to a food bank?

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Number of Loaves 15 16 17 18 19 20 21 Probability 0.02 0.05 0.10 0.16 0.28 0.20 0.15 0.04