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Mathematics, 28.06.2019 02:20 20calzoy

“each morning the manager of a bakery has to decide how many cakes they should bake for sale that da show more each morning the manager of a bakery has to decide how many cakes they should bake for sale that day. the manager knows that on any given day the demand for cake is a random variable taking the values 0 1 2 3 4 5 6 and 7 each with probability 1/8. he also knows that he will make a profit of $1 for each cake that he sells and a loss of $0.40 for each cake he bakes but doesnt sell. (a) one cake; (b) two cakes; (c) three cakes; (d) four cakes; (e) five cakes; (f) six cakes; (g) seven cakes. how many cakes should he choose to make in order to maximize his expected profit? hint: what happens if the demand for cake exceeds to the number of cakes baked?

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