Megley Cheese Company is a small manufacturer of several different cheese products. One of the products is a cheese spread that is sold to retail outlets. Jason Megley must decide how many cases of cheese spread to manufacture each month. The probability that the demand will be six cases is 0.1, for 7 cases is 0.3, for 8 cases is 0.5, and for 9 cases is 0.1. The cost of every case is $45, and the price that Jason gets for each case is $95. Unfortunately, any cases not sold by the end of the month are of no value, due to spoilage.

Hint: You need to fill in the following table and be careful with the waste whenever production exceeds consumption or the forgone revenue if supply/production falls short of demand.

Profit	Demand is 6	Demand is 7	Demand is 8	Demand is 9
Probability
Production is 6
Production is 7
Production is 8
Production is 9

Question 6 (10 points)

 

Question 6 options:

The Expected Monetary Value (EMV) of producing 6 cases of cheese spread is. (Please round to a whole dollar.)

Answer rating: 100% (QA)

Solution cost number of cases Total 95 6 570 ... View the full answer