Question
***Please only reply with answers using R. Please leave for other experts if not able to help with R programming. Practical Management Science (4th Edition)
***Please only reply with answers using R. Please leave for other experts if not able to help with R programming.
Practical Management Science (4th Edition) - Chapter 11 problem 53P
I need help trying to figure out how to set up a simulation to the below question using R.
The annual demand for Prizdol, a prescription drug manufactured and marketed by the NuFeel Company, is normally distributed with mean 50,000 and standard deviation 12,000. We assume that demand during each of the next 10 years is an independent random draw from this distribution. NuFeel needs to determine how large they should build the Prizdol plant to maximize its expected profit over the next 10 years. If the company builds a plant that can produce x units of Prizdol per year, it will incur a one-time cost of $16 for each of these x units. NuFeel will produce only the amount demanded each year, and each unit of Prizdol produced will sell for $3.70. Each unit of Prizdol produced incurs a variable production cost of $0.20. It costs $0.40 per year to operate a unit of capacity. 1. Among the capacity levels of 30K, 35K, 40K, 45K, 50K, 55K, and 60K units per year, which level maximizes expected profit? Use simulation to answer the question.
2. Using the capacity from your answer to the previous question, NuFeel can be 95% certain that expected profit for the 10-year period will be between what two values?
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