Colin sells pretzels at the local high school basketball games. For an upcoming game, Colin must decide how many pretzel
Posted: Fri Jul 01, 2022 9:08 am
Colin sells pretzels at the local high school basketball games. For an upcoming game, Colin must decide
how many pretzels to order (170, 190, or 210), at a cost of $0.50 each. Colin sells pretzels for $1.50
each. However, any unsold pretzels must be thrown away. If the game is interesting, Colin thinks that
fewer people will visit his stand. In such a case, Colin estimates that demand will be normally
distributed, with a mean of 140 and a standard deviation of 20. However, if the game is a blowout, he
expects more people to visit the stand. Demand in this case follows a discrete uniform distribution
between 180 and 200. Based on his familiarity with the two teams, he estimates that there is only a
40% chance that the game will be a blowout.
Set up a simulation model and replicate it N=500 times
for each order size to determine Colin's expected profit and expected percentage of unsold pretzels.
What do you recommend that Colin do?
how many pretzels to order (170, 190, or 210), at a cost of $0.50 each. Colin sells pretzels for $1.50
each. However, any unsold pretzels must be thrown away. If the game is interesting, Colin thinks that
fewer people will visit his stand. In such a case, Colin estimates that demand will be normally
distributed, with a mean of 140 and a standard deviation of 20. However, if the game is a blowout, he
expects more people to visit the stand. Demand in this case follows a discrete uniform distribution
between 180 and 200. Based on his familiarity with the two teams, he estimates that there is only a
40% chance that the game will be a blowout.
Set up a simulation model and replicate it N=500 times
for each order size to determine Colin's expected profit and expected percentage of unsold pretzels.
What do you recommend that Colin do?