Wally runs a fruit & vege stall Wally's VegeRama - at the local Sunday market....

 

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Wally runs a fruit & vege stall – Wally's VegeRama - at the local Sunday market. He can buy watermelons from his supplier for $5 each. He can sell watermelons for $10 each. On any particular Sunday, demand for watermelons follows a Poisson distribution with mean 5. Any watermelons that are not sold on Sunday go bad before the next weekend. Wally's current policy is to stock 6 watermelons. a) Fill in the table below (some entries have been completed for you) Watermelons sold Probability Profit/Loss (S) -30 1 2 3 0.1404 4. 5 6. (4 marks) b) What is the probability that Wally will make a loss? (2 marks) c) What is Wally's expected profit? What is the variance of the profit? (4 marks) d) How many watermelons should Wally stock to maximise his expected profit? (4 marks) e) How many watermelons should Wally stock if he wants the probability of making a loss to be less than 10%? (3 marks) Wally runs a fruit & vege stall – Wally's VegeRama - at the local Sunday market. He can buy watermelons from his supplier for $5 each. He can sell watermelons for $10 each. On any particular Sunday, demand for watermelons follows a Poisson distribution with mean 5. Any watermelons that are not sold on Sunday go bad before the next weekend. Wally's current policy is to stock 6 watermelons. a) Fill in the table below (some entries have been completed for you) Watermelons sold Probability Profit/Loss (S) -30 1 2 3 0.1404 4. 5 6. (4 marks) b) What is the probability that Wally will make a loss? (2 marks) c) What is Wally's expected profit? What is the variance of the profit? (4 marks) d) How many watermelons should Wally stock to maximise his expected profit? (4 marks) e) How many watermelons should Wally stock if he wants the probability of making a loss to be less than 10%? (3 marks)

Answer rating: 100% (QA)

for part e Wally needs to keep 5 ... View the full answer