4. (3 Points) Galaxy Co. distributes wireless routers to Internet service provid

Question

4. (3 Points) Galaxy Co. distributes wireless routers to Internet service providers. Galaxy procures each router for $75 from its supplier and sells each router for $125. Monthly demand for the router is a normal random variable with a mean of 100 units and a standard deviation of 20 units. At the beginning of each month, Galaxy orders enough routers from its supplier to bring the inventory level up to 100 routers. If the monthly demand is less than 100, 9 Galaxy pays $15 per outer that remains in inventory at the end of the month. If the monthly demand exceeds 100, Galaxy sells only the 100 routers in st shortage cost of $30 for each unit of demand that is unsatisfied to represent a l goodwill among its customers. Management would like to use a simulation model to analyze this situation. Perform the simulation for 1000 times, what is the average monthly profit resulting from its policy of stocking 100 routers at the beginning of each month? tock. Galaxy assigns a loss-of-

Explanation / Answer

Here i have used Excel RAND function for simulation.

Where Demand = INT(NORMINV(RAND(),100,20))

Procure cost = 75 * 100

Shortfall cost = If [ demand < 100 ; 15 * (100 - demand) , 0]

Excess cost = If [ demand > 100 ; 30 * (demand - 100), 0]

The Excel file is here

I am abble to attach only 300 observations as it only allows 6500 characters

Average monthly profit = $4654.94  

Demand Procure Cost Shortfall cost Excess demand cost Revenue 95 7500 15 75 0 0 4925 103 7500 0 0 30 90 4910 99 7500 15 15 0 0 4985 84 7500 15 240 0 0 4760 102 7500 0 0 30 60 4940 123 7500 0 0 30 690 4310 78 7500 15 330 0 0 4670 126 7500 0 0 30 780 4220 71 7500 15 435 0 0 4565 119 7500 0 0 30 570 4430 105 7500 0 0 30 150 4850 127 7500 0 0 30 810 4190 94 7500 15 90 0 0 4910 118 7500 0 0 30 540 4460 120 7500 0 0 30 600 4400 59 7500 15 615 0 0 4385 73 7500 15 405 0 0 4595 124 7500 0 0 30 720 4280 98 7500 15 30 0 0 4970 86 7500 15 210 0 0 4790 73 7500 15 405 0 0 4595 150 7500 0 0 30 1500 3500 68 7500 15 480 0 0 4520 100 7500 0 0 0 0 5000 100 7500 0 0 0 0 5000 124 7500 0 0 30 720 4280 85 7500 15 225 0 0 4775 80 7500 15 300 0 0 4700 109 7500 0 0 30 270 4730 111 7500 0 0 30 330 4670 97 7500 15 45 0 0 4955 146 7500 0 0 30 1380 3620 106 7500 0 0 30 180 4820 93 7500 15 105 0 0 4895 93 7500 15 105 0 0 4895 69 7500 15 465 0 0 4535 84 7500 15 240 0 0 4760 112 7500 0 0 30 360 4640 95 7500 15 75 0 0 4925 103 7500 0 0 30 90 4910 70 7500 15 450 0 0 4550 121 7500 0 0 30 630 4370 84 7500 15 240 0 0 4760 110 7500 0 0 30 300 4700 100 7500 0 0 0 0 5000 57 7500 15 645 0 0 4355 87 7500 15 195 0 0 4805 122 7500 0 0 30 660 4340 90 7500 15 150 0 0 4850 65 7500 15 525 0 0 4475 96 7500 15 60 0 0 4940 108 7500 0 0 30 240 4760 93 7500 15 105 0 0 4895 88 7500 15 180 0 0 4820 89 7500 15 165 0 0 4835 95 7500 15 75 0 0 4925 106 7500 0 0 30 180 4820 93 7500 15 105 0 0 4895 129 7500 0 0 30 870 4130 103 7500 0 0 30 90 4910 107 7500 0 0 30 210 4790 83 7500 15 255 0 0 4745 143 7500 0 0 30 1290 3710 49 7500 15 765 0 0 4235 112 7500 0 0 30 360 4640 107 7500 0 0 30 210 4790 103 7500 0 0 30 90 4910 126 7500 0 0 30 780 4220 127 7500 0 0 30 810 4190 91 7500 15 135 0 0 4865 96 7500 15 60 0 0 4940 129 7500 0 0 30 870 4130 94 7500 15 90 0 0 4910 91 7500 15 135 0 0 4865 128 7500 0 0 30 840 4160 98 7500 15 30 0 0 4970 102 7500 0 0 30 60 4940 118 7500 0 0 30 540 4460 87 7500 15 195 0 0 4805 122 7500 0 0 30 660 4340 110 7500 0 0 30 300 4700 108 7500 0 0 30 240 4760 120 7500 0 0 30 600 4400 108 7500 0 0 30 240 4760 108 7500 0 0 30 240 4760 103 7500 0 0 30 90 4910 107 7500 0 0 30 210 4790 106 7500 0 0 30 180 4820 66 7500 15 510 0 0 4490 92 7500 15 120 0 0 4880 131 7500 0 0 30 930 4070 127 7500 0 0 30 810 4190 129 7500 0 0 30 870 4130 83 7500 15 255 0 0 4745 118 7500 0 0 30 540 4460 86 7500 15 210 0 0 4790 103 7500 0 0 30 90 4910 129 7500 0 0 30 870 4130 102 7500 0 0 30 60 4940 96 7500 15 60 0 0 4940 99 7500 15 15 0 0 4985 104 7500 0 0 30 120 4880 112 7500 0 0 30 360 4640 121 7500 0 0 30 630 4370 92 7500 15 120 0 0 4880 97 7500 15 45 0 0 4955 99 7500 15 15 0 0 4985 110 7500 0 0 30 300 4700 110 7500 0 0 30 300 4700 76 7500 15 360 0 0 4640 90 7500 15 150 0 0 4850 91 7500 15 135 0 0 4865 77 7500 15 345 0 0 4655 118 7500 0 0 30 540 4460 111 7500 0 0 30 330 4670 116 7500 0 0 30 480 4520 77 7500 15 345 0 0 4655 105 7500 0 0 30 150 4850 89 7500 15 165 0 0 4835 70 7500 15 450 0 0 4550 75 7500 15 375 0 0 4625 92 7500 15 120 0 0 4880 112 7500 0 0 30 360 4640 80 7500 15 300 0 0 4700 74 7500 15 390 0 0 4610 147 7500 0 0 30 1410 3590 110 7500 0 0 30 300 4700 126 7500 0 0 30 780 4220 81 7500 15 285 0 0 4715 90 7500 15 150 0 0 4850 96 7500 15 60 0 0 4940 88 7500 15 180 0 0 4820 77 7500 15 345 0 0 4655 89 7500 15 165 0 0 4835 88 7500 15 180 0 0 4820 73 7500 15 405 0 0 4595 80 7500 15 300 0 0 4700 65 7500 15 525 0 0 4475 60 7500 15 600 0 0 4400 75 7500 15 375 0 0 4625 104 7500 0 0 30 120 4880 113 7500 0 0 30 390 4610 94 7500 15 90 0 0 4910 120 7500 0 0 30 600 4400 105 7500 0 0 30 150 4850 94 7500 15 90 0 0 4910 72 7500 15 420 0 0 4580 83 7500 15 255 0 0 4745 96 7500 15 60 0 0 4940 130 7500 0 0 30 900 4100 82 7500 15 270 0 0 4730 99 7500 15 15 0 0 4985 66 7500 15 510 0 0 4490 108 7500 0 0 30 240 4760 136 7500 0 0 30 1080 3920 107 7500 0 0 30 210 4790 88 7500 15 180 0 0 4820 106 7500 0 0 30 180 4820 79 7500 15 315 0 0 4685 117 7500 0 0 30 510 4490 83 7500 15 255 0 0 4745 85 7500 15 225 0 0 4775 99 7500 15 15 0 0 4985 98 7500 15 30 0 0 4970 73 7500 15 405 0 0 4595 96 7500 15 60 0 0 4940 111 7500 0 0 30 330 4670 111 7500 0 0 30 330 4670 82 7500 15 270 0 0 4730 95 7500 15 75 0 0 4925 114 7500 0 0 30 420 4580 104 7500 0 0 30 120 4880 97 7500 15 45 0 0 4955 94 7500 15 90 0 0 4910 100 7500 0 0 0 0 5000 82 7500 15 270 0 0 4730 100 7500 0 0 0 0 5000 90 7500 15 150 0 0 4850 116 7500 0 0 30 480 4520 108 7500 0 0 30 240 4760 103 7500 0 0 30 90 4910 133 7500 0 0 30 990 4010 101 7500 0 0 30 30 4970 78 7500 15 330 0 0 4670 115 7500 0 0 30 450 4550 116 7500 0 0 30 480 4520 81 7500 15 285 0 0 4715 105 7500 0 0 30 150 4850 138 7500 0 0 30 1140 3860 88 7500 15 180 0 0 4820 100 7500 0 0 0 0 5000 130 7500 0 0 30 900 4100 93 7500 15 105 0 0 4895 72 7500 15 420 0 0 4580 95 7500 15 75 0 0 4925 66 7500 15 510 0 0 4490 98 7500 15 30 0 0 4970 107 7500 0 0 30 210 4790 92 7500 15 120 0 0 4880 87 7500 15 195 0 0 4805 112 7500 0 0 30 360 4640 100 7500 0 0 0 0 5000 76 7500 15 360 0 0 4640 98 7500 15 30 0 0 4970 94 7500 15 90 0 0 4910 120 7500 0 0 30 600 4400 108 7500 0 0 30 240 4760 110 7500 0 0 30 300 4700 104 7500 0 0 30 120 4880 103 7500 0 0 30 90 4910 93 7500 15 105 0 0 4895 97 7500 15 45 0 0 4955 95 7500 15 75 0 0 4925 130 7500 0 0 30 900 4100 106 7500 0 0 30 180 4820 90 7500 15 150 0 0 4850 100 7500 0 0 0 0 5000 68 7500 15 480 0 0 4520 70 7500 15 450 0 0 4550 105 7500 0 0 30 150 4850 73 7500 15 405 0 0 4595 84 7500 15 240 0 0 4760 101 7500 0 0 30 30 4970 122 7500 0 0 30 660 4340 76 7500 15 360 0 0 4640 92 7500 15 120 0 0 4880 75 7500 15 375 0 0 4625 122 7500 0 0 30 660 4340 90 7500 15 150 0 0 4850 110 7500 0 0 30 300 4700 95 7500 15 75 0 0 4925 50 7500 15 750 0 0 4250 126 7500 0 0 30 780 4220 100 7500 0 0 0 0 5000 130 7500 0 0 30 900 4100 97 7500 15 45 0 0 4955 109 7500 0 0 30 270 4730 75 7500 15 375 0 0 4625 123 7500 0 0 30 690 4310 78 7500 15 330 0 0 4670 107 7500 0 0 30 210 4790 67 7500 15 495 0 0 4505 77 7500 15 345 0 0 4655 88 7500 15 180 0 0 4820 99 7500 15 15 0 0 4985 98 7500 15 30 0 0 4970 103 7500 0 0 30 90 4910 128 7500 0 0 30 840 4160 91 7500 15 135 0 0 4865 110 7500 0 0 30 300 4700 115 7500 0 0 30 450 4550 107 7500 0 0 30 210 4790 111 7500 0 0 30 330 4670 91 7500 15 135 0 0 4865 92 7500 15 120 0 0 4880 76 7500 15 360 0 0 4640 128 7500 0 0 30 840 4160 74 7500 15 390 0 0 4610 87 7500 15 195 0 0 4805 118 7500 0 0 30 540 4460 113 7500 0 0 30 390 4610 97 7500 15 45 0 0 4955 123 7500 0 0 30 690 4310 114 7500 0 0 30 420 4580 100 7500 0 0 0 0 5000 128 7500 0 0 30 840 4160 131 7500 0 0 30 930 4070 123 7500 0 0 30 690 4310 102 7500 0 0 30 60 4940 105 7500 0 0 30 150 4850 116 7500 0 0 30 480 4520 96 7500 15 60 0 0 4940 119 7500 0 0 30 570 4430 99 7500 15 15 0 0 4985 126 7500 0 0 30 780 4220 98 7500 15 30 0 0 4970 110 7500 0 0 30 300 4700 88 7500 15 180 0 0 4820 91 7500 15 135 0 0 4865 99 7500 15 15 0 0 4985 108 7500 0 0 30 240 4760 90 7500 15 150 0 0 4850 116 7500 0 0 30 480 4520 126 7500 0 0 30 780 4220 67 7500 15 495 0 0 4505 104 7500 0 0 30 120 4880 84 7500 15 240 0 0 4760 71 7500 15 435 0 0 4565 110 7500 0 0 30 300 4700 86 7500 15 210 0 0 4790 114 7500 0 0 30 420 4580 79 7500 15 315 0 0 4685 86 7500 15 210 0 0 4790 112 7500 0 0 30 360 4640 97 7500 15 45 0 0 4955 91 7500 15 135 0 0 4865 68 7500 15 480 0 0 4520 68 7500 15 480 0 0 4520 105 7500 0 0 30 150 4850

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