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Apatix Apatix
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4 years ago
Daily sales of bread by Salvador Monella's Baking Company follow the historical pattern shown in the table below. It costs the bakery 50 cents to produce a loaf of bread, which sells for 95 cents. Any bread unsold at the end of the day is sold to the parish jail for 25 cents per loaf. Construct the decision table of conditional payoffs. How many loaves should Sal bake each day in order to maximize contribution?

Demand   400   500   600   700   800
Probability   .20   .20   .40   .15   .05
Textbook 

Operations Management


Edition: 10th
Authors:
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AlmeyricAlmeyric
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4 years ago
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The Excel OM decision table and solution appear below. The best expected value is $228, which occurs with the decision to bake 600 loaves.

Profit   Sell 400   Sell 500   Sell 600   Sell 700   Sell 800      EMV
Probability   0.2   0.2   0.4   0.15   0.05      
Bake 400   180   180   180   180   180      180
Bake 500   155   225   225   225   225      211
Bake 600   130   200   270   270   270   Maximum   228
Bake 700   105   175   245   315   315      217
Bake 800   80   150   220   290   360      195.5
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