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Daniel Faraday is a travelling salesman, who sells specialized scientific equipment at a price of $8,000 to industrial suppliers. Every workday, Daniel visits between 4
Daniel Faraday is a travelling salesman, who sells specialized scientific equipment at a price of $8,000 to industrial suppliers. Every workday, Daniel visits between 4 and 6 suppliers with equal probability, where each supplier that he visits makes a purchase with 2 percent probability. On the rare occasion that Daniel makes more than one sale in a day, the equipment manufacturer sends him a bonus check of $10,000. Daniel has three types of expenses. First, he must pay $3,500 to the equipment manufacturer for every sale he makes. Second, he incurs a daily transportation cost, which is log-normally distributed with a mean of $2 and a standard deviation of $1. Third, he incurs his daily lodging cost, which is normally distributed with a mean of $80 and a standard deviation of $20. Daniel is interested in learning his expected daily profit. Create a descriptive model for Daniel's daily profit. Make all variables and calculations bold. (16 points) Identify all random variables, and provide their parameters. (4 points)
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