Course: Simulation & Modeling

Calculate a simulation analysis for the below given scenario by showing the optimal number of news paper to be sell everyday to avoid any loss.

The profits are given by the following relationship: Profit =

Revenue cost of lost profit from + salvage from sale from sales newspapers excess demand of scrap papers

The revenue from sales is 50 paise for each paper sold; the cost of newspapers is 33 paise for each paper purchased; the lost profit from excess demand is 17 paise for each paper demanded that could not be provided; salvage value of scrap papers is 5 paise each

Tables 15 and 16 provide the random digit assignments for the types of news days and the demands for those news days

To solve this problem by simulation requires setting a policy of buying a certain number of papers each day, then simulating the demands for papers over the 23-day time period to determine the total profit; The policy (number of newspapers purchased) is changed to other values and the simulation repeated until the best value is found.

Table 1: Random digit Assignment for type of Newsday

Type of Newsday	Probability	Cumulative Probability	Random digit Assignment
Good Fair Poor	0.35 0.45 0.20	0.35 0.80 1.00	01 - 35 36 - 80 81 - 00