b

PROBLEM 4: Consider a retail store which sells a perishable good with a life of only one period. At the beginning of each period, the store in anticipation of demand, order Q pounds from a supplier at a cost of $75/lb. The demand is uncertain, but based on historical data; it is normally distributed with mean of 350 and standard deviation of 50 . The retail price of this item is $95/lb. In case the demand is less than Q, any unused amount has no salvage value. (b) For Q obtained in part (a), use uniform random numbers between 0 and 1 (U) given in table below to simulate the store's operation for next 10 periods. Based on your simulation, what is your estimate of the stores expected profit per period? (Hint: Use appropriate EXCEL function to generate random (normal) demand using the Uniform 01 random number U )