Question

) David also sells cakes at the store. Assume the cakes retail at $5 per cake, but David only pays $2 per cake. Cakes cannot be sold after one week, and they have a negligible salvage value. David estimates that the weekly demand for cakes is: 15 cakes in 10% of the weeks, 16 cakes in 20% of the weeks, 17 cakes in 25% of the weeks, 18 cakes in 20% of the weeks, 19 cakes in 15% of the weeks, and 20 cakes in 10% of the weeks. How many cakes should David order

Answer 1

17 cakes

Step-by-step explanation:

we need to find the expected demand

15 cakes x 10% = 1.5

16 cakes x 20% = 3.2

17 cakes x 25% = 4.25

18 cakes x 20% = 3.6

19 cakes x 15% = 2.85

20 cakes x 10% = 2

total = 17.4, so we must round down to 17 cakes since we cannot purchase or resell parts of a cake