The Manager of a Bakery Orders Three "Cake-To-Go" Wedding Cakes

question 107

Essay

The manager of a bakery orders three "cake-to-go" wedding cakes every Saturday to accommodate last-minute purchases. Demand for the cakes can be described by a Poisson distribution that has a mean of 2. The cakes cost $10 each to prepare, and they sell for $26 each. Any cakes that haven't been sold by the end of the day are sold for half price the next day. Usually, half of those are sold and the rest are tossed. What stocking level would be appropriate?

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Definitions:

In Rem Jurisdiction

A legal principle that allows a court to exercise jurisdiction over a particular piece of property, regardless of who owns the property or where the owner is located.

Counterclaim

A legal claim made in response to the plaintiff’s initial claim in a civil suit. Unlike a defense, the counterclaim is the defendant’s affirmative attempt to obtain legal relief; in effect, it states a cause of action entitling the defendant to such relief. Often, the counterclaim must arise out of the occurrence that forms the basis for the plaintiff’s claim.

Compelled to Testify

The legal obligation of a witness to give testimony in a legal proceeding, even against their own interest, under penalty of law.

Affirmative Defense

A defense used in litigation where the defendant introduces evidence, which, if found to be credible, will negate criminal or civil liability, even if it is proven that the defendant committed the alleged act.