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Question: Smells Good Bakery sells bread for $2 per loaf that costs $0.80 per loaf to make. Since the bread cannot be sold after the day it is made, the bakery marks the bread down at the end of the day at an 80% discount (discount price = $0.40). Demand for the bread is normally distributed with a mean of 300 and a standard deviation of 30. What order quantity maximizes expected profit for Smells Good Bakery?
Assume all remaining items sent to the discount store can be sold. What is the optimal order quantity?
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