Question
In August of the current year, a car dealer is trying to determine how many cars of the next model year to order. Each car
In August of the current year, a car dealer is trying to determine how many cars of the next model year to order. Each car ordered in August costs $20,000. The demand for the dealer's next year models has the probability distribution shown in the chart below. Each car sells for $25,000. If demand for next year's cars exceeds the number of cars ordered in August, the dealer must reorder at a cost of $22,000 per car. Excess cars can be disposed of at $17,000 per car. Use simulation to determine how many cars to order in August. Which is 20-30.
Demand | Probability |
20 | 0.30 |
25 | 0.15 |
30 | 0.15 |
35 | 0.20 |
40 | 0.20 |
For your optimal order quantity, find a 95% confidence interval for the expected profit. If needed, round your answers to whole dollar amounts.
We are 95% confident that the expected profit for the optimal order quantity is between $_______ and $_________ .
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