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The Kelly Theater produces plays and musicals for a regional audience. For a typical performance, the theater sells at least tickets and occasionally reaches its
The Kelly Theater produces plays and musicals for a regional audience. For a typical performance, the theater sells at least tickets and occasionally reaches its capacity of seats. Most often, about tickets are sold. The fixed cost for each performance is normal with a mean of $ and a standard deviation of $ Ticket prices range from $ to $ depending on the location of the seat. Of the seats are priced at $ at $ and the remaining at $ Of all the tickets sold, the $ seats sell out first. If the total demand is at least then all the $ seats sell out. If not, then between and of the $ seats sell, with the remainder being the $ seats. If however, the total demand is less than or equal to then the number of $ and $ seats sold are usually split evenly. The theater runs performances per year and incurs an annual fixed cost of $ million. Develop a simulation model to evaluate the profitability of the theater using trials. What is the distribution of annual net profit and the risk of losing money over a year?
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