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QSO 520 FINAL CASE STUDY

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QSO 520 FINAL CASE STUDY

Here are the professor’s instructions, please read carefully and provide the information requested:

Careful analysis relevant to each case study and its questions is required. Ensure that you succinctly address the critical elements.

Put key concepts in formulating the problem for Monte Carlo simulation, developing the layout, using appropriate formulas for creating demand distribution, preparing data tables, and using Excel simulation for the specified number of iterations, finding solutions, and correctly interpreting outputs to answer the questions asked.

Your analysis of the questions posed must demonstrate an excellent understanding of the use and limitations of Monte Carlo Simulation.

Your answer must draw informed conclusions that are justified with evidence from the outputs and correctly interpreting results related to questions asked.

1.     (P10-18) Chelsea Truman sells celebrity magazines on Sunday morning in an area surrounded by three busy shopping centers. Demand for the magazines is distributed as shown in the following table:
DEMAND

PROBABILITY

50

0.05

75

0.10

100

0.25

125

0.30

150

0.20

175

0.10

Chelsea has decided to order 100 magazines from her supplier. Chelsea pays \$2 for each magazine she orders and sells each magazine for \$3. Unsold magazines can be returned to the supplier for \$0.75.

(a) Simulate 1 year (52 Sundays) of operation to calculate Chelsea’s total yearly profit. Replicate this calculation N times.What is the average yearly profit?

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