A bookstore must decide how many calendars to order. Each calendar is purchased

Question

A bookstore must decide how many calendars to order. Each calendar is purchased by the bookstore for $7.50 and book store sells them for $10. If there is any unsold calendars at the end of the day, they are carried over as inventory at $0.10/unit/day. At the end of 10 days, any remaining calendar will be returned to the publisher for a refund of $1.50 per calendar. Current order policy is “order 200 each day” with initial inventory of 10 units. Based on historical sales, demand for calendars (at full price) is given by the following probability distribution:

a) Set up intervals of random numbers that can be used to simulate the number of calendar sales at the bookstore.

b) Using the 10 random numbers below, generate the demand for 10 days.  

17       25     6         62     74    57    71   80     50     98

c) Based on the simulation of 10 days of demand from part b, determine the total net profit obtained by bookstore.

Demand per day Probability 100 .30 150 .20 200 .30 250 .15 300 .05

Explanation / Answer

a)

b)

demand if number is 100 0<=x<30 150 30<=x<50 200 50<=x<80 250 80<=x<95 300 95<=x<100

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