Question 2: (5 points) Inventory Management (Single Period Inventory Model) Newspaper Boy Problem: Daily demand for a newspaper is independent and identical. Demand can be characterized as the following probability distribution: Demand in units Probability 10 0.2 20 0.2 30 0.2 40 0.2 50 0.2 Cost of the newspaper is $1. The newspaper is sold to customers for a price of $1.40 cach. Any unsold newspapers at the end of the day have to be returned to the publisher and yields a revenue of $0.25 per copy. A) How many newspapers will be optimal to be inventoried at the start of the day, so the expected profit is maximum? B) What are the expected (average) profits for each stock (inventory) level? Simulate for 15 days and draw your conclusions. Use only the random numbers provided to generate demand, A B D E R# Demand 1 Trials/Day 2 1 N 3 3 2 7 4 3 ca 5 5 4 5 6 6) 7 6 7 8 7 6 9 8 3 10 9 3 11 10 7 12 11 13 12 |o|on co N | w 14 13 6 15 14 16 15 17 18 19 20