Assignment:
A bagel shop buys each bagel for .08 and sells each bagel for .35. Leftover bagels at the end of they day are purchased by a local soup kitchen for .03 per bagel. The shop owner has observed daily demand (Q), the following probabilities (F(Q)
Q=0, F(Q)= .05
Q=5, F(Q)= .1
Q= 10 F(Q)= .1
Q= 15, F(Q)= .2
Q= 20, F(Q)= .25
Q= 25, F(Q)= .15
Q= 30, F(Q)= .1
Q= 35, F(Q)= .05
Q1. What is the optimal daily order, in multiples of 5?
Q2. If the daily demand is normally distributed (the mean and variance can be obtained from the table above), then what is the optimal daily order?