Two years ago, Panera Bread opened a franchise on Plymouth Road. They bake their bread freshevery morning very early before the store opens, and they dont make more throughout the day. Aloaf costs$2 to bake and can be sold to a customer for$5. Any loaves that are leftover at the endof the day can be donated to a local food bank and will have a$0.50 tax benefit. The manager,Ed, has been estimating how much to bake each day based on his expert judgment. However, thestore has also been recording how many loaves of bread are ordered over the past se

However, the store has also been recording how many loaves of bread are ordered over the past several months,and he would like to start using this data to determine how much to bake.When Ed looks at the data, he notices that the number of loaves ordered on Tuesdays is uniformly distributed between 300 and 410 loaves. How many loaves should this Panera location bake on Tuesday mornings?

The number of loaves that Panera location should bake on Tuesday mornings will be calculated thus:

First, we should note that the shortage cost, Cu will be:

= Selling price - Cost .

= $5 - $2

= $3

Also, the overage cost, Co will be:

= cost - salvage benefit

= $2 - $0.5

= $ 1.5

We the n calculate the critical ratio which will be:

= Cu/(Cu+Co)

= 3/(3+1.5)

= 3/4.5

= 0.667

The number of loaves that Panera location should bake on Tuesday mornings will be:

= 300 + [0.667 × (410-300)]

= 300 + (0.667 × 110)

= 300 + 73.37

= 373.37

= 373 loaves