A large catalog merchandiser is planning to have a special furniture promotion a year from now....

  

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A large catalog merchandiser is planning to have a special furniture promotion a year from now. To do this, the company must place its order for the furniture now. It plans to sign a contract with the manufacturer for 2500 chairs at a cost of $175 per unit. The promotion will last for eight weeks. Marketing research suggests that the demand for the chairs during the first eight weeks has a uniform distribution between 1000 and 3000 units, and the initial price during the first eight weeks is a triangular random variable between $200 and $300 with a peak value at $250. After the first eight weeks, all remaining units will be offered for sale at half the initial price. • Perform an Excel spreadsheet simulation with 5000 replications; • Estimate the mean profit; compute a 90% confidence interval for the mean profit and a 90% prediction interval for the profit; • Estimate the probability of having negative profit, and construct a 90% confidence interval for this probability. A large catalog merchandiser is planning to have a special furniture promotion a year from now. To do this, the company must place its order for the furniture now. It plans to sign a contract with the manufacturer for 2500 chairs at a cost of $175 per unit. The promotion will last for eight weeks. Marketing research suggests that the demand for the chairs during the first eight weeks has a uniform distribution between 1000 and 3000 units, and the initial price during the first eight weeks is a triangular random variable between $200 and $300 with a peak value at $250. After the first eight weeks, all remaining units will be offered for sale at half the initial price. • Perform an Excel spreadsheet simulation with 5000 replications; • Estimate the mean profit; compute a 90% confidence interval for the mean profit and a 90% prediction interval for the profit; • Estimate the probability of having negative profit, and construct a 90% confidence interval for this probability.