Brook\'s Cafe sells slices of 7 layer chocolate cake. A slice of cake sells for

ID: 3273313 • Letter: B

Question

Brook's Cafe sells slices of 7 layer chocolate cake. A slice of cake sells for $7 and costs

the café $3 per slice. Usually, In order to eliminate waste, the café discounts slices of cake to $2 after regular

hours (4:00pm) and is able to sell all remaining cake. Brook's Café estimates the demand for chocolate

cake during regular hours to be Poisson distributed with a mean of 8 slices per day.

Pretend Brook's Café discontinued its discount policy after 4:00pm. Now, they throw away any

remaining slices of cake at the end of the day. What is the optimum quantity of slices Brook's Café

should purchase per day?

a) 7

b) 8

c) 9

d) 10

e) Cannot be determined without the standard deviation.

Ans:

As,for x=7,probability of demand is highest,so x=7 is the optimal quantity.

Option a is correct.

x P(demand<=x) P(demand>x) 7 0.453 0.547 8 0.593 0.407 9 0.717 0.283 10 0.816 0.184 11 0.888 0.112 12 0.936 0.064

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