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  3. 1 suppose we are selling hot dogs during a basketball...

Question: 1 suppose we are selling hot dogs during a basketball...

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1. Suppose we are selling hot dogs during a basketball game. A hot dog sells for $15 each but only costs $5 each to make. If we run out of hot dogs during the game, it will be impossible to get more. On the other hand, a leftover hot dog has a value of $1 for each hot dog. Assume that we believe the fans would buy 100 hot dogs with probability 3/10, 110 hot dogs with probability 2/10, 120 hot dogs with probability 2/10, 130 hot dogs with probability 1/10, and 140 hot dogs with probability 2/10. (a) Find the expected demand. (b) If 120 hot dogs are prepared, what is the expected profit? (c) What is the corresponding expected (potential) cost?
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