Question
A few FME professors want to develop parameters for a typical FME business. Based on their experience a typical business orders 300 units, sells its
A few FME professors want to develop parameters for a "typical" FME business. Based on their experience a typical business orders 300 units, sells its product for $15 and has variable costs that are random but within a defined range. Businesses have to pay for all units ordered whether they sell them or not. Furthermore, in any order lose up to 4 units are damaged or defective, and therefore can't be sold. Also, unfilled demand is assigned a cost of $25 per unit. Thus the number of units ordered is critical to profitability. One business decided to develop a simulation model to see if it could help them increase their overall profitability.
In this problem what would the actual sales (unit) be?
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