Question
Michael Abrams runs a specialty clothing store that sells collegiate sports apparel. One of his primary business opportunities involves selling custom screenprinted sweatshirts for college
Michael Abrams runs a specialty clothing store that sells collegiate sports apparel. One of his primary business opportunities involves selling custom screenprinted sweatshirts for college football bowl games. He is trying to determine how many sweatshirts to produce for the upcoming Tangerine Bowl game. During the month before the game, Michael plans to sell his sweatshirts for $25 apiece. At this price, he believes the demand for sweatshirts will be triangularly distributed with a minimum demand of 10,000, maximum demand of 30,000 and a most likely demand of 18,000. During the month after the game, Michael plans to sell any remaining sweat shirts for $12 apiece. At this price, he believes the demand for sweatshirts will be normally distributed with a mean of 5,000, and a standar deviation of 1,000. Two months after the game, Michael plans to sell any remaining sweatshirts to a surplus store that has agreed to buy up to 2,000 sweatshirts for a price of $3 per shirt.
Michael can order custom screenprinted sweatshirts for $8 apiece . Suppose that he has decided to order 18,000 sweatshirts, perform a simulation-based analysis on his totoal profit.
Simulation model | ||||
Cost per item ($) | 8 | |||
Number of items ordered | 18000 | |||
Month before the game | ||||
Selling price per item | 25 | |||
Demand | ||||
Items sold | Revenue1 | |||
Month after the game | ||||
Items left | ||||
Selling price per item | 12 | |||
Demand | ||||
Items sold | Revenue2 | |||
Two Month after the game | ||||
Items left | ||||
Selling price per item | 3 | |||
Max Demand | 2000 | |||
Items sold | Revenue3 | |||
Total Revenue |
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