Athens Gas Station has figured out the weekly demand distribution for their gas sales. Each gallon of
Question:
Athens Gas Station has figured out the weekly demand distribution for their gas
sales. Each gallon of gas sold at the pump results in a profit of 10 cents/gallon
and any lost sales results in a cost of 15 cents/gallon. The gas station at present
has 2000 gallons in storage. The storage capacity is 5500 gallons. Any excess
gas above the storage capacity is shipped back to the distributor at a cost of $2
cents/gallon. Simulate the demand for 40 weeks.
Demand probability
2000 0.12
3000 0.23
4000 0.48
5000 0.17
( a). What is the average weekly demand, sales, shortage, and ship back quantities? What are the corresponding average weekly costs and profits.
( b). vary the order quantity to figure out the one that results in highest average weekly profit. plot a chart of order quantity and profit to make your point.