Let D be the daily demand for cheese pies at a small bakery, assume we have the
Question:
Let D be the daily demand for cheese pies at a small bakery, assume we have the following information
P(D=0) = 0.1
P(D=1) = 0.3
P(D=2) = 0.2
P(D=3) = 0.2
P(D=4) = 0.2
If any pies are left at the end of the day, they need to be thrown in the bin. So to try to minimize wastage the bakery makes 3 cheese pies at the start of the day (and can't get any more that day). Let S be the number they sell that day.
a) Find the pmf of S (just write it in a similar format in which I have listed D above) (2 marks)
b) Calculate the mean of S (2 marks)
c) If each pie costs $2.50 to make and the selling price is $6, calculate the expected profit for cheese pies. (3 marks)
d) If each pie costs $2.50 to make and the selling price is $6, calculate the variance in the expected profit for cheese pies (it might help to know that Var(S) = 1.09) (2 marks)
Data Analysis and Decision Making
ISBN: 978-0538476126
4th edition
Authors: Christian Albright, Wayne Winston, Christopher Zappe