A bakery makes fresh donuts every morning.If any are left at the end of the day they are donated to a homeless shelter.The number of donuts that can be sold each day is uncertain and the bakery must decide early each morning,how many donuts to make that day.The bakery has created the following payoff table to summarize the situation. It estimates the following probabilities for the respective levels of demand. If on a given day the bakery knew in advance that demand was going to be high,then the payoff that day would be 350.

Question

A bakery makes fresh donuts every morning.If any are left at the end of the day they are donated to a homeless shelter.The number of donuts that can be sold each day is uncertain and the bakery must decide early each morning,how many donuts to make that day.The bakery has created the following payoff table to summarize the situation.  It estimates the following probabilities for the respective levels of demand.  If on a given day the bakery knew in advance that demand was going to be high,then the payoff that day would be 350.

Quizplus · Accepted Answer

According to the payoff table given, if demand is high and the bakery produces 200 donuts, the payoff is 350. Therefore, if the bakery knew in advance that demand was going to be high, the payoff for that day would indeed be 350.

A Bakery Makes Fresh Donuts Every Morning