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(B) in Order To Maximize The Daily Profits, 40 Cakes Should Be Supplied

The document shows a table with the probability, demand, supply and expected value of cakes. It calculates the expected value for supplying 20, 40 and 60 cakes. The expected value is highest at 40 cakes, so the conclusion is that supplying 40 cakes daily would maximize profits.

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Azeez
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41 views1 page

(B) in Order To Maximize The Daily Profits, 40 Cakes Should Be Supplied

The document shows a table with the probability, demand, supply and expected value of cakes. It calculates the expected value for supplying 20, 40 and 60 cakes. The expected value is highest at 40 cakes, so the conclusion is that supplying 40 cakes daily would maximize profits.

Uploaded by

Azeez
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Supply of cakes

Probability 20 40 60

0.3 20 400 200 0


[(20x20)- [(20x20)-
(20x10)] (40x10)]
0.5 Demand 40 400 800 600
of cakes (20x40) [(40x20)-
(20x10)]
0.2 60 400 800 1200
(60x20)

EV 400 620 540


[(400*0.3)+(400*0.5)+(400*0.2) (200*0.3)+(800*0.5)+(800*0.2) (0*0.3)+(600*0.5)+(1200*0.2)

(b) In order to maximize the daily profits, 40 cakes should be supplied.

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