Question

jim is selling candy at his school. he charges $4 per pack, and it costs him $1.2 to make each pack. he will donate the unsold packs to a nearby church if he can't sell all his candy. based on his sales data, he has the following demand distribution. what are the optimal packs of candy to produce?

Answer 1

The optimal number of packs of candy for Jim to produce, given the sales data is D. 12 packs.

How to find the amount produced ?

To determine the optimal number of candy packs Jim should produce, calculate the expected profit for each possible demand level.

Selling price per pack

= $4

- Cost to make each pack

= $1.2

Profit per pack = Selling price - Cost

= $4 - $1.2

= $2.8

Using the options, find the highest profit from the packs 9, 10, 11, and 12:

For 9 packs: $23.436

For 10 packs: $24.864

For 11 packs: $25.872

For 12 packs: $26.656

Producing 12 packs of candy results in the highest expected profit of $26.656 which makes this the optimal production.

Options include:
A. 9

B. 10

C. 11

D. 12