Megley Cheese Company is a small manufacturer of several different cheese products. One of the products is a cheese spread that is sold to retail outlets. Jason Megley must decide how many cases of cheese spread to manufacture each month. The probability that the demand will be six cases is 0.1, for 7 cases is 0.3, for 8 cases is 0.5, and for 9 cases is 0.1. The cost of every case is $45, and the price that Jason gets for each case is $95. Unfortunately, any cases not sold by the end of the month are of no value, due to spoilage.

How many cases of cheese should Jason manufacture each month?

Question

Marina Salazar

Business

7 October, 20:58

Megley Cheese Company is a small manufacturer of several different cheese products. One of the products is a cheese spread that is sold to retail outlets. Jason Megley must decide how many cases of cheese spread to manufacture each month. The probability that the demand will be six cases is 0.1, for 7 cases is 0.3, for 8 cases is 0.5, and for 9 cases is 0.1. The cost of every case is $45, and the price that Jason gets for each case is $95. Unfortunately, any cases not sold by the end of the month are of no value, due to spoilage.

How many cases of cheese should Jason manufacture each month?

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Answers (1)

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Drew Abbott · Answer 1

Cost of every cases is $45.

6 cases cost is = $45*6=$270

Demand

Profit Expected Profit

6 0.1 300 30

0.3 300 90

0.5 300 150

0.1 300 30

Answer: Total 300

Answer 7 to 9:

Profit Expected Profit

9 0.1 165 16.5

0.3 260 78

0.5 355 177.5

0.1 450 45

Answer Total 317.00

Answer 8 to 9:

6 (0.1) + 7 (0.3) + 8 (0.5) + 9 (0.1) = 7.6