A new edition of a popular textbook will be published next year. The publisher currently has 2000 copies on hand and is deciding whether to do a nother printing before the new edition comes out. The publisher estimates that demand for the textbook during the next year will be normal with a mean of 5400 and standard deviation of 2300. A production run incurs a fixed cost of $10,000 plus a variable cost of $15 per book printed. Books are sold for $130 per book. Any demand that cannot be met incurs a penalty of $20 per book, due to loss of goodwill. Up to 500 of any leftover books can be sold to Barnes and Noble for $35 per book. The publisher is interested in maximizing expected profit. The following print run sizes are being considered:4000, 6000, 8000, 10000, 12000. Finish settin up your model to use @Risk with 1000 replications to decide on the best policy.

Display a picture of the profit histogram displaying the results for the optimal policy.

(a)For the optimal decision, between what two values can the publisher be 90% certain that the actual profit associated with remaining sales will be?

(b)What is your estimate of the probability that the profit will exceed $700,000?

(c)Compute a risk/return graph showing mean on the vertical axis for the 5 run sizes.