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Daily sales of a perishable food product are known to be either 8,9,10,or 11 cases with probabilities 0.1,0.3,0.4 and 0.2, respectively. The cost of producing one of these is $4 while the selling price is $7. Cases not sold during the day are sold to a food processing plat for $1 each, but cases can only be produced in the morning before the store opens. If you wish to maximize expected profit, how many cases should be produced each day?

Statistics and Probability, Statistics

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