SOLVED

50) Daily sales of bread by Salvador Monella’s Baking Company follow the historical pattern shown in the table below. It costs the bakery 50 cents to produce a loaf of bread, which sells for 95 cents. Any bread unsold at the end of the day is sold to the parish jail for 25 cents per loaf. Construct the decision table of conditional payoffs. How many loaves should Sal bake each day in order to maximize contribution? Demand 400 500 600 700 800 Probability .20 .20 .40 .15 .05 51) The campus bookstore sells highlighters that it purchases by the case. Cost per case, including shipping and handling, is $200. Revenue per case is $350. Any cases unsold will be discounted and sold at $175. The bookstore has estimated that demand will follow the pattern below Demand level Probability 10 cases 20 percent 11 cases 20 percent 12 cases 40 percent 13 cases 15 percent 14 cases 5 percent a. Construct the bookstore’s payoff table. b. How many cases should the bookstore stock in order to maximize expected profit? c. How would your answer differ if the clearance price were not $175 per case but $225 per case? (It is not necessary to re-solve the problem to answer this.)