Problem 1 (Hint: Refer to the example: Walton Bookstore model) In August of the current year, a car dealer is trying to determine how many cars of the next model year to order. Each car ordered in August costs $18,000. The demand for the dealer's next year models is normally distributed with mean of 200 and standard deviation of 80. Each car sells for $20,000. Excess cars can be disposed of at $15,000 per car. The car dealer wants to decide the optimal order quantity to maximize its expected profit. Run the simulation 300 times for order quantity = 200, 250, and 300. For each of these order quantities, report the estimated mean and standard deviation of the profit (Use "STDEV" function for standard deviation and Average function for the mean). Which order quantity do you recommend and why? Note: 1) Solver is NOT used in this problem. 2) Demand follows a normal distribution. |