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Apex Bakery would like you to recommend how many loaves of bread to make at the beginning of the day. Each loaf costs $3.00 and can be sold for $6.00. Loaves left over are given to charity. Research has shown that the probabilities for demand of 25, 50, and 75 loaves are 35%, 25%, and 40%, respectively. Make a recommendation to Apex on whether to bake 25, 50 or 75 loaves each morning. Which strategy is most profitable?
Hint: Profit = Revenue-Costs, also revenue is based on the number of loaves sold, which is the minimum of the supply of loaves and eventual demand.
A. Most profitable to bake 25 loaves
B. Most profitable to bake 50 loaves
C. Most profitable to bake 75 loaves
D. Most profitable to bake 100 loaves
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