It is March, and the annual NCAA Basketball Tournament is down to the final four teams. Randy is a T-shirt vendor who plans to order T-shirts with the names of the final four teams from a manufacturer and sell them to the fans.

The fixed cost of any order is $750, the variable cost per shirt to Randy is $8, and Randy's selling price is $18. However, this price will be charged only until a week after the tournament. After that time, Randy figures that interest in the T-shirts will be low, so he plans to sell all remaining T-shirts, if any, at $6 each.

His best guess is that demand for the T-shirts during the full-price period will be 1500. He's thinking about ordering 1450 T-shirts, but he wants to build a spreadsheet model that will let him experiment with the uncertain demand and his order quantity.

Modeling Assignment 1

Question 1. What is the dependent variable the decision maker is interested in maximizing?

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Question 2. What independent variable is the decision maker trying to make a decision about?

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Question 3. Change the discount price to $8. Now try inputting several different order values higher that are than the demand. What happens to the profit?

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