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IEOR150F10_hw04 - IEOR 150 Fall 2010 Homework 4 1(Modied...

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IEOR 150, Fall 2010 Homework 4 1. (Modified from Problem 5.8 in the textbook; 15 points) Billy’s Bakery bakes fresh bagels each morning. The daily demand for bagels is a random variable with a distribution estimated from prior experience given in Table 1. The bagels cost Billy’s 8 cents to make, and they are sold for 35 cents each. Bagels unsold at the end of the day are purchased by a nearby charity soup kitchen for 3 cents each. Number of bagels sold in one day Probability 0 0.05 5 0.10 10 0.10 15 0.20 20 0.25 25 0.15 30 0.10 35 0.05 Table 1: Demand distribution for Problem 1 (a) (5 points) Based on the given discrete distribution, how many bagels should Billy’s bake at the start of each day? The answer must be a multiple of 5. (b) (2 points) Suppose that at the beginning of one day, there are 28 baked bagels on hand. How many additional bagels should be baked? (c) (3 points) Find the mean and the standard deviation of the discrete distribution in Table 1.
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