Henrique Correa's bakery prepares all its cakes between 4 a.m. and 6 a.m. so they will be fresh when customers arrive. Day-old cakes are virtually always sold, but at a 50% discount off the regular $10 price.
The cost of baking a cake is $6, and demand is estimated to be normally distributed, with a mean of 25 and a standard deviation of 4. What is the optimal stocking level?