The kumquat is a monthly zine that compiles campus and local news along with articles written by students. It is published in print and circulated on campus by a student club. The editors of the zine estimate that the monthly demand is a random variable showing a normal distribution with a mean of 2,400 copies and a standard deviation of 500. The cost of publishing a copy of this zine fluctuates from month to month however can be represented by a uniform distribution with values ranging from $3.25 to $4.00 per copy. The fixed cost for managing the zine can be represented by a uniform distribution ranging between the values of $750 to $1,250. The zine are sold on campus for $5 a copy through a group of student vendors who sell the zine at a booth set up in the quad. These student vendors are paid $0.50 for each zine copy sold. All the unsold copies at the end of the month are purchased back by the university for $2.25 a copy and distributed to local public schools for free.

Develop a spreadsheet simulation model (using 1,000 trials) for this student club magazine to answer the following questions:

a. What is the estimated average profit if the student club decides to order 2,500 copies of the magazine?

b. The other monthly activities of the student club which typically costs about $500 depend on the profit turned over from the magazine. What is the probability that monthly profit from the magazine is greater than $500?

c. Create a frequency distribution (using the FREQUENCY() function) and a histogram (using a column chart) for the profit. For your calculations use the minimum and the maximum expected profit values to determine a reasonable range and use increments of $500.

d. The student club is considering an order quantity of 3,000 copies per month as an alternative to their current order quantity of 2,500 copies. What is the probability that the profit from order quantity of 2,500 units will be greater than the profit from the order quantity of 3,000 units.

Answer rating: 100% (QA)

a The estimated average profit if the student club decides to order 2500 copies o... View the full answer