Question

Some customers do not plan ahead, so every day, the bakers at All About Cakes bakery produce four cakes for last minute emergency orders. If the cakes are not sold within two days, they are thrown out. Each cake costs $10 in supplies and overhead, and it sells for $25. The probability distribution for the number of cakes sold out of each batch of four is given below. Find the expected profit for the bakery generated from these batches of four cakes. (Hint: For every unsold cake, the bakery loses $10. For every sold cake the bakery earns $15 in profit.)

Answer 1