Essay
In August 2017, a car dealer is trying to determine how many 2018 cars to order. Each car ordered in August 2017 costs $16,000. The demand for the dealer's 2018 models has the probability distribution shown in the table below. Each car sells for $21,000. If the demand for 2018 cars exceeds the number of cars ordered in August 2017, the dealer must reorder at a cost of $18,000 per car. Excess cars can be disposed of at $13,000 per car.
-(A) Use simulation to determine how many cars the dealer should order in August, 2017 to maximize his expected profit.
(B) For the optimal order quantity, find a 95% confidence interval for the expected profit.
(C) Why is it important to develop the confidence interval in (B)?
Correct Answer:
Verified
(A) Summary measures from simulation wit...View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Correct Answer:
Verified
View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Q13: The uniform distribution is bounded by a
Q21: RISKSIMTABLE is a function in @RISK for
Q27: Which of the following statements is correct
Q35: When we run simulation,the @RISK automatically keeps
Q38: A common guideline in constructing confidence intervals
Q43: A probability distribution is bounded if there
Q47: Sometimes it is convenient to treat a
Q50: Obtain another set random numbers by pressing
Q55: We typically choose between a symmetric and
Q57: The binomial distribution can be well approximated