A new edition of our management science textbook will be published 1 year from now. Our publisher currently has 2000 copies on hand and is deciding whether to do another printing before the new edition comes out. The publisher estimates that demand for the book during the next year is governed by the following probability distribution:

Demand	Probability
3000	0.20
4000	0.40
6000	0.10
8000	0.20
10000	0.10

A production run incurs a fixed cost of $62,000 plus a variable cost of $10 per book printed. Books are sold for $30 per book. Any demand that cannot be met incurs a penalty cost of $2 per book, due to loss of goodwill. Half of any leftover books can be sold to Barnes and Noble for $3 per book. My publisher is interested in maximizing expect profit.

The following print run sizes are under consideration: 0 (no production run), 1000, 2000, 4000, 6000, and 8000.

Use simulation with 1000 replications and answer the following questions:

a) What print run size would you recommend?  (Click to select)  0  1000  2000  4000  6000  8000

b) For your optimal decision, our publisher can be 95% certain that the actual profit associated with remaining sales of the current edition will be between $  and $  .

Answer rating: 100% (QA)

step 1 of 4 First enter the following input data Picture 1 step 2 of 4 For the simul... View the full answer