Question

A large restaurant purchases cakes daily from a local bakery. The cake costs ₹10 each and sells at ₹15 each. If the cakes are not sold on the same day, they are sold in another outlet for ₹8. The relative frequency distribution for the restaurant sales is as below: Daily Sales (dozens): 30 31 32 33 34 35 36 Relative Frequency: 0.01 0.09 0.16 0.25 0.30 0.11 0.08 You are required to state: i) The optimum quantity which the restaurant should purchase to maximize the expected profit. ii) How much the owner could afford to pay for perfectly correct information of sales?

          A large restaurant purchases cakes daily from a local bakery. The cake costs ₹10 each and sells at ₹15 each. If the cakes are not sold on the same day, they are sold in another outlet for ₹8. The relative frequency distribution for the restaurant sales is as below:

Daily Sales (dozens):
30
31
32
33
34
35
36

Relative Frequency:
0.01
0.09
0.16
0.25
0.30
0.11
0.08

You are required to state:
i) The optimum quantity which the restaurant should purchase to maximize the expected profit.
ii) How much the owner could afford to pay for perfectly correct information of sales?

Added by Laura M.

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