Concession vendors at a college football stadium employ simulation analysis to help determine the # of cups of beer to purchase and sell during a game. They use an operations management model based on attendance for the purchase and sales forecasts.

The amount purchased and sold dont synchronize perfectly because free beer is given to generous donors to the school and beer is wasted as some gets spilled and some cups get over-filled.

It hurts financially when the beer runs out because each cup of beer is sold for $9.50 per cup. Those lost sales cannot be recovered. Cost per cup is about $1.

The beer is purchased in barrels and cannot be long-term stored because the beer goes flat once exposed to air. Any extra beer at the end of game is given to the schools Agriculture Dept. to become part of the animal feed and is an unrecovered expense.

The amount purchased and sold dont synchronize perfectly.

The equation used to estimate the # of cups to purchase is:

attendance^(.95)

The equation used to estimate the # of cups to be sold is:

1796*ln(attendance)

Overage: # of cups purchased > # of cups sold

Underage: # of cups sold > # of cups purchased

The concession operators are concerned with the # of cups sold, not the # consumed. Attendance is normally distributed with a population mean of 70,000 and a population standard deviation of 10,000.

REQUIRED

Run 100 Monte Carlo simulations and clearly list:

1.Sample mean of purchases

2.Sample standard deviation of purchases

3.Sample mean of sales

4.Sample standard deviation of sales

5.Highest level of purchases

6.Lowest level of purchases

7.Highest level of sales

8.Lowest level of sales

9.% of underages