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A car dealer must decide how many cars of the next year's model to order. He has estimated that demand will follow the given discrete

A car dealer must decide how many cars of the next year's model to order. He has estimated that demand will follow the given discrete distribution:

Demand Probability
20 0.30
25 0.15
30 0.15
35 0.20
40 0.20

Each car sells for $25,000 and the dealer is committed to meeting all demand. Each car ordered now costs $20,000. Each car that has to be reordered (because demand exceeds the dealer's initial order) costs $22,000. Any unsold cars can be returned to the manufacturer for a refund of $17,000 per car.

The dealer wants to evaluate the consequences of ordering 30 cars now.

  1. Form a profit model that uses an order quantity of 30 and a randomly sampled demand value. That is, calculate all relevant costs, revenues, refunds, and the resulting profit. (4 pts)
  2. Run this experiment 1000 times. (2 pts)
  3. Report the min, max, and average profit for the decision to order 30 cars now. (2 pts)

Submit Excel sheet.

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