Reference no: EM131644434

Question: The Fizzy Company produces six-packs of soda cans. Each can is supposed to contain at least 12 ounces of soda. If the total weight in a six-pack is less than 72 ounces, Fizzy is fined $100 and receives no sales revenue for the six-pack. Each six-pack sells for $3.00. It costs Fizzy $0.02 per ounce of soda put in the cans. Fizzy can control the mean fill rate of its soda-filling machines. The amount put in each can by a machine is normally distributed with standard deviation 0.10 ounce.

a. Assume that the weight of each can in a six-pack has a 0.8 correlation with the weight of the other cans in the six-pack. What mean fill quantity maximizes expected profit per six-pack? Try mean fill rates from 12.00 to 12.35 in increments of 0.05.

b. If the weights of the cans in the six-pack are probabilistically independent, what mean fill quantity maximizes expected profit per six-pack? Try the same mean fill rates as in part a.

c. How can you explain the difference in the answers to parts a and b?