Question: Demand for milk is stochastic and uniformly distributed between 1 and 10 gallons each day (only whole gallons can be sold). The milk you sell
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Demand for milk is stochastic and uniformly distributed between 1 and 10 gallons each day (only whole gallons can be sold). The milk you sell lasts for 2 days in the store and can be sold to customers on both the first and second day of its shelf life. You reorder milk from the dairy farm every other day. You sell milk to customers for $5 a gallon, purchase it from the dairy farm for $2 a gallon, and if there are any leftover after the second day, sell it to a cheese-maker for $1 a gallon. You have decided to order 15 gallons of milk from the dairy farm every other day. Run a simulation with excel with 1000 trials to identify the following:
A. The mean and standard deviation of your profit (30 points)
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B.The probability of making a negative profit
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