A sweatshirt supplier is trying to decide how many sweatshirts to print for the upcoming NCAA basketball championships. The final four teams have emerged from the quarterfinal round, and there is now a week left until the semifinals, which are then followed in a couple of days by the finals. Each sweatshirt costs $10 to produce and sells for $25. However, in three weeks, any leftover sweatshirts will be put on sale for half price, $12.50. The supplier assumes that the demand for his sweatshirts during the next three weeks (when interest in the tournament is at its highest) has the distribution shown in the file P15_14.xlsx. The residual demand, after the sweatshirts have been put on sale, has the distribution also shown in this file. The supplier, being a profit maximizer, realizes that every sweatshirt sold, even at the sale price, yields a profit. However, he also realizes that any sweatshirts produced but not sold (even at the sale price) must be thrown away, resulting in a $10 loss per sweatshirt. Analyze the supplier's problem with a simulation model.

Use @RISK to analyze the sweatshirt situation in Problem 14 of the previous section. Do this for the discrete distributions given in the problem. Then do it for normal distributions. For the normal case, assume that the regular demand is normally distributed with mean 9800 and standard deviation 1300 and that the demand at the reduced price is normally distributed with mean 3800 and standard deviation 1400.

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The sweatshirt supplier wants to decide as to how many sweatshirts to print so as to maximize profit First the demand is assumed to follow discrete di... View the full answer