problem - 4

S Problem 11-11 (Algo) Famous Albert prides himself on being the Cookie King of the West. Small, freshly baked cookies are the specialty of his shop. Famous Albert has asked for help to determine the number of cookies he should make each day. From an analysis of past demand, he estimates demand for cookies as DEMAND 1,800 dozen 2,000 2,200 2,400 2,600 2,800 3,000 PROBABILITY OF DEMAND 0.05 0.08 0.29 0.28 0.13 0.04 0.13 Each dozen sells for $0.69 and costs $0.46, which includes handling and transportation. Cookies that are not sold at the end of the day are reduced to $0.29 and sold the following day as day-old merchandise. a. Compute the expected profit or loss for each cookie making decision quantity. Note: Round your answer to the nearest whole number. Enter expected losses with a negative sign. Cookies Baked (Dozen) 1,800 2,000 2,200 2,400 2,600 2,800 3,000 Probability of Demand 0.05 0.08 0.29 0.28 0.13 0.04 0.13 Expected Profit or Loss b. Based on your answers to part a., what is the optimal number of cookies to make?

Famous Albert prides himself on being the Cookie King of the West. Small, freshly baked cookles are the specialty of his shop. Famous Albert has asked for help to determine the number of cookles he should make each day From an analysis of past demand, he estimates demand for cookies as Each dozen sells for $0.69 and costs $0.46, which includes handing and transportation. Cookies that are not sold at the end of the day are reduced to $0.29 and sold the following day as day-old merchandise. o. Compute the expected profit or loss for each cookie making decision quantity Note: Round your answer to the nearest whole number. Enter expected losses with a negative sign. b. Based on your answers to part a. What is the optimat number of cookes to make? a. Compute the expected profit or loss for each cookie making decision quantity Note: Round your answer to the nearest whole number. Enter expected losses with a negotive sign. b. Based on your answers to part a whot is the optimal number of coohies to make? c. By using marginal analysis, what is the optimai number of cookies to make