2. Every evening, Empire News needs to determine how many copies of the newspaper to pur- chase for the following morning. A newspaper costs $0.50 to purchase and sells for $2.25. Any unsold newspapers can be recycled at the end of the day at a value of $0.25 per newspaper. The following table provides Empire News’ daily demand distribution for newspapers. 1 Number of newspapers| 160 | 170| 175| 185 | 200 Probability 210| 220 0.2 | 0.1 | 0.05 | 0.2 | 0.15 | 0.05 | 0.20 | 0.05 205 a. Suppose that Empire News is considering the purchase of 200 newspapers. What is the marginal value from a 201st newspaper? Is it profitable for Empire News to purchase its 201st newspaper? Justify your answer. b. What is the optimal number of newspapers for Empire News to purchase each evening?
2. Every evening, Empire News needs to determine how many copies of the newspaper to pur- chase for the following morning. A newspaper costs $0.50 to purchase and sells for $2.25. Any unsold newspapers can be recycled at the end of the day at a value of $0.25 per newspaper. The following table provides Empire News’ daily demand distribution for newspapers. 1 Number of newspapers| 160 | 170| 175| 185 | 200 Probability 210| 220 0.2 | 0.1 | 0.05 | 0.2 | 0.15 | 0.05 | 0.20 | 0.05 205 a. Suppose that Empire News is considering the purchase of 200 newspapers. What is the marginal value from a 201st newspaper? Is it profitable for Empire News to purchase its 201st newspaper? Justify your answer. b. What is the optimal number of newspapers for Empire News to purchase each evening?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter10: Introduction To Simulation Modeling
Section10.4: Simulation With Built-in Excel Tools
Problem 14P
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0.30 × $1.75 - 0.70×$0.5
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