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Probability expected profit

An ice-cream store makes 150 ice-cream balls every day. The cost of making each ice-cream ball is $3. The price of an ice-cream ball is $8. The demand distribution is as follows: 100 ice-cream balls with probability 25%, 150 ice-cream balls with probability 50%, and 200 ice-cream balls with probability 25% .
a. What is the store’s expected profit every day?
b. If the store decides to make 200 ice-cream balls every day, what is the store’s expected profit every day?

pls help me, this hw is due tmr!!! thanks!!!
Original post by Rockgo288
An ice-cream store makes 150 ice-cream balls every day. The cost of making each ice-cream ball is $3. The price of an ice-cream ball is $8. The demand distribution is as follows: 100 ice-cream balls with probability 25%, 150 ice-cream balls with probability 50%, and 200 ice-cream balls with probability 25% .
a. What is the store’s expected profit every day?
b. If the store decides to make 200 ice-cream balls every day, what is the store’s expected profit every day?

pls help me, this hw is due tmr!!! thanks!!!


In each case you're looking for the expected profit, or putting it another way, the expectation of the profit, i.e. E(Profit).

You should be familiar with the formula for the expectation of a discrete random variable:

The sum of, the value the variable can take times the probability it takes that value.

So, if the demand is 100 per day, what's the profit then?

Have a go and see what you can do.

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