42. A Las Vegas supermarket bakery must decide how many wedding cakes to prepare for the upcom-… 1 answer below »

42.             A Las Vegas supermarket bakery must decide how many wedding cakes to prepare for the upcom- ing weekend. Cakes cost $33 each to make, and they sell for $60 each. Unsold cakes are reduced to half-price on Monday, and typically one-third of those are sold. Any that remain are donated to a nearby senior center. Analysis of recent demand resulted in the following table:

Demand

0

1

2

3

Probability

.15

.35

.30

.20

How many cakes should be prepared to maximize expected profit?

a.    Use the ratio method.

b.   Use the tabular method (see Table 13.4).

$32 to order  

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