Vendor sells newspapers and tries to maximize profits

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A news vendor sells newspapers and tries to maximize profits. The number of papers sold each day is a random variable. However, analysis of the past month's data shows the distribution of daily demand in Table 16. A paper costs the vendor 20¢. The vendor sells the paper for 30¢. Any unsold papers are returned to the publisher for a credit of 10¢. Any unsatisfied demand is estimated to cost 10¢ in goodwill and lost profit. If the policy is to order a quantity equal to the preceding day's demand, determine the average daily profit of the news vendor by simulating this system. Assume that the demand for day 0 is equal to 32.

Reference no: EM131103989

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