Robert's Furniture Mr. Roberts runs a furniture rental stores. The monthly demands are between 20 and 100 orders. The average contribution per order is $700. Mr. Roberts operates from a rental store and his monthly expenses are as follows Rent of stores 4000 Power, utilities etc. 3500 Part time accountant 2500 One full time employee 2000 Salary of helpers 2000 The need of helpers varies depending on the demand as follows; No of Demand From To Helpers 20 40 2 40 60 3 60 80 4 80 100 5 Typical Income Statement at the high end and the low end of the demand is given as follows Demand 20 100 Average Contribution 700 700 Total Contribution 14000 70000 Fixed Costs 12000 12000 Helpers 2 5 Salary of Helpers 4000 10000 Profit -2000 48000 Since there is a big difference of profit between the high end and low end of the demand Mr. Roberts would like an estimate of the expected profits, its standard deviation and the range of profit that he can expect 95% of the time. Hints: Demand Uniform between 20 100 Probability of demand x = (x-20)/(100-20) Therefore Demand = 20+ Rand()*(100-20)

a) What is the average demand? What will be the income statement on average demand?

b) Taking into account the uncertainty and the differential resource demand at different demand level, what will be your answer to Mr. Roberts questions? What is the estimate of expected profit, its standard deviation, and the 95% limits of that profit?

c) What is the probability of breaking even?

d) How much is the expected profit different from the profit on expected demand? Are these supposed to be same or different? Explain. Your answers should be based on 1000 trials.