SIMULATION: WIDGET CARD COMPANY IS TRYING TO DETERMINE HOW MANY HOLIDAY CARDS TO PRODUCE THE COST OF PRINTING X CARDS IS = $2,000,000 + 70*X E.G., PRINTING 1 MILLION CARDS, COST-$2,000,000 - .70*1,000,000 - $2,700,000 DEMAND IS UNCERTAIN. LET DEMAND - A NORMAL RANDOM VARIABLE WITH MEAN - 2,000,000 AND STANDARD DEVIATION - 400,000 CARDS ARE SOLD FOR $4.00 AND EXCESS CARDS HAVE A SALVAGE) VALUE - $.05 PRODUCTION QUANTITY MUST BE A DISCRETE NUMBER - 2.4, 2.6, 2.8, 3.0 OR 3.2 MILLION CARDS CREATE A FORMULA BOX SHOWING ALL NEEDED CALCULATIONS FOR ONE ITERATION, THEN DO 1000 SIMULATIONS FOR EACH LEVEL OF PRODUCTION QUANTITY A) WHICH PRODUCTION QUANTITY MAXIMIZES WIDGETS EXPECTED PROFIT ? B) WHAT IS THE LOWEST 5TH PERCENTILE (VaR) FOR EACH LEVEL OF PRODUCTION? DOES THAT HELP / HURT YOUR ANSWER TO A) ANSWER: ? MEAN PROFIT 4,300,000 y.).465E-7x 1.399x+ 2.873E-6 R: -0.9971 4,175,000 4,050,000 25.000 3,800,000 2.000.000 2.300.000 2.600,000 2.900.000 3.200.000 SIMULATION: WIDGET CARD COMPANY IS TRYING TO DETERMINE HOW MANY HOLIDAY CARDS TO PRODUCE THE COST OF PRINTING X CARDS IS = $2,000,000 + 70*X E.G., PRINTING 1 MILLION CARDS, COST-$2,000,000 - .70*1,000,000 - $2,700,000 DEMAND IS UNCERTAIN. LET DEMAND - A NORMAL RANDOM VARIABLE WITH MEAN - 2,000,000 AND STANDARD DEVIATION - 400,000 CARDS ARE SOLD FOR $4.00 AND EXCESS CARDS HAVE A SALVAGE) VALUE - $.05 PRODUCTION QUANTITY MUST BE A DISCRETE NUMBER - 2.4, 2.6, 2.8, 3.0 OR 3.2 MILLION CARDS CREATE A FORMULA BOX SHOWING ALL NEEDED CALCULATIONS FOR ONE ITERATION, THEN DO 1000 SIMULATIONS FOR EACH LEVEL OF PRODUCTION QUANTITY A) WHICH PRODUCTION QUANTITY MAXIMIZES WIDGETS EXPECTED PROFIT ? B) WHAT IS THE LOWEST 5TH PERCENTILE (VaR) FOR EACH LEVEL OF PRODUCTION? DOES THAT HELP / HURT YOUR ANSWER TO A) ANSWER: ? MEAN PROFIT 4,300,000 y.).465E-7x 1.399x+ 2.873E-6 R: -0.9971 4,175,000 4,050,000 25.000 3,800,000 2.000.000 2.300.000 2.600,000 2.900.000 3.200.000