What will be toms expected profit from selling cookies

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Tom Cruise operates a Cookie shop downtown. Its daily demand for cookies is 200 on average with a standard deviation of 35. (Assume a normal distribution.) Tom purchases the cookies for $0.75 and sells them for $1.25. Any cookies at the end of the day are presented as gifts to customers on the second day.

(a) Suppose that Tom buys 220 cookies each morning. Use Analytic Solver Platform to perform 5,000 trials of a Monte Carlo simulation on a spreadsheet. What will be Tom's expected profit from selling cookies? What is the probability that Tom will make a profit of at least $0?

(b) Generate a parameter analysis report to consider five possible order quantities between 165 and 235. Which of these order quantities maximizes Tom's expected profit?

(c) Generate a trend chart for the five order quantities considered in part (b).

(d) Use Analytic Solver Platform to search for the order quantity that maximizes Tom's expected profit.

Reference no: EM132155919

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