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Question: Decision analysis problem.
You own a coffee shop in a metro Toronto shopping mall. It is Friday evening and you are trying to decide how many dozen blueberry muffins to bake for the Saturday morning rush.
Based upon your experience with Saturdays, you think that the probability of being able to sell 5 dozen is 0.25, of being able to sell 10 dozen in 0.55, of being able to sell 15 dozen is 0.15 and of being able to sell 20 dozen is 0.05
A dozen muffins sells for $10.00 and has an incremental cost of $6.25. If you have leftover muffins, you will them to the local food bank for $2.25 each.
Use your knowledge of decision analysis to model and solve this problem in order to recommend the number of dozen muffins that should be baked.
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