Question

The amount of milk that the American Cookie Company sells in a given week is random. Suppose the milk sells for $2.00 per cup and it costs the store $1.50 per cup. The following describes the distribution of demand for milk in a one week period. There is a probability of 0.14 that the store will sell 100 cups of milk; there is a probability of 0.2 that the store will sell 150 cups of milk; there is a probability of 0.34 that the store will sell 170 cups of milk; otherwise, the store will sell 220 cups of milk. What is the expected number of cups of milk the store will sell in a given week? (please express your answer using 2 decimal places)

Answer 1

x                     p                        xp

100               0.14                      14

150              0.20                      30

170                0.34                   57.8

220 1-(0.14+0.20+0.34) = 0.32   70.4

--------------------------------------------------------

                                  E (X) = 172.20

So,

Expected number of cups = 172.20