Introduction to Management Science 12th Edition by Bernard Taylor

Exercise 10

Loebuck Grocery orders milk from a dairy on a weekly basis. The manager of the store has developed the following probability distribution for demand per week (in cases):
The milk costs the grocery $10 per case and sells for $16 per case. The carrying cost is $0.50 per case per week, and the shortage cost is $1 per case per week. Simulate the ordering system for Loebuck Grocery for 20 weeks. Use a weekly order size of 16 cases of milk and compute the average weekly profit for this order size. Explain how the complete simulation for determining order size would be developed for this problem.