1)

In August 2009, a car dealer is trying to determine how many 2010 cars to order. Each car ordered in August 2009 costs $16,000. The demand for the dealer's 2010 models has the probability distribution shown in the table below. Each car sells for $21,000. If the demand for 2010 cars exceeds the number of cars ordered in August 2009, the dealer must reorder at a cost of $18,000 per car. Excess cars can be disposed of at $13,000 per car.

Use simulation to compute the average profit and the standard deviation of the profit for an order quantity of 30.

Use simulation to compute the average profit and the standard deviation of the profit for an order quantity of 35.

Set seed number to 1 for both runs.

2)

Salemach Corporation is a start-up company that manufactures simple machines. It is interested in analyzing the profit from a new machine. It estimates that the selling price will be $150 per unit and the setup and advertising costs will total $250,000. The company estimates that the per unit raw material cost is uniformly distributed between $50 and $80 and are equally likely. The demand is normally distributed with a mean of 12,000 units and a standard deviation of 3000 units. The probability distribution for a range of labor cost per unit is given below.

Labor Cost Probability

$52 0.05

$53 0.25

$54 0.40

Obtain estimates for the mean profit, maximum profit, minimum profit, and standard deviation of profit.

What is your estimate of the probability of a loss?

Set the random number seed to 1.