Henry has a newspaper stand where he sells papers for $0.50 each.  The papers cost him $0.30 each, giving him a 20-cent profit on each one he sells.  From past experience, Henry knows that

10% of the time he sells 100 papers

20% of the time he sells 150 papers

40% of the time he sells 200 papers

20% of the time he sells 250 papers

10% of the time he sells 300 papers

 

Assuming that Henry believes the cost of a lost sale is 10 cents and any unsold papers cost him $0.30, simulate Henry's profit outlook over 25 days if he orders 175 papers each day.  Use the random numbers that I generated and are shown below and are also available to you in the accompanying Excel file (Random numbers for newspaper problem.xlsx).  For each trial (day), calculate the following: number of papers demanded, number of papers sold, number of papers left over, number of sales lost, and profit.  Calculate the following summary statistics for the simulation: average profit, % of times profit is negative. Would you recommend that Henry increases or decreases his standing order? (Note that Henry is very intolerant of risk.) Why?