Suppose you are working as a data scientist for an online retailer, and you are tasked with optimizing the pricing strategy for a new product. The product is currently priced at $50, but you want to determine whether a higher or lower price would result in greater profit. You estimate that the demand for the product can be modeled using a normal distribution with a mean of 100 units per day and a standard deviation of 20 units per day. The cost of producing each unit is $30, and the retailer's profit is the difference between the revenue and the cost. The retailer incurs a fixed cost of $1000 per day for operating expenses, regardless of the number of units sold. Use simulation to answer to the question.

Suppose you are working as a data scientist for an online retailer, and you are tasked with optimizing the pricing strategy for a new product. The product is currently priced at $50, but you want to determine whether a higher or lower price would result in greater profit. You estimate that the demand for the product can be modeled using a normal distribution with a mean of 100 units per day and a standard deviation of 20 units per day. The cost of producing each unit is $30, and the retailer's profit is the difference between the revenue and the cost. The retailer incurs a fixed cost of $1000 per day for operating expenses, regardless of the number of units sold. Use simulation to answer to the question.

Operations Research : Applications and Algorithms

4th Edition

ISBN:9780534380588

Author:Wayne L. Winston

Publisher:Wayne L. Winston

Chapter23: Simulation With The Excel Add-in @risk

Section23.10: Using Data To Obtain Inputs For New Product Simulations

Problem 3P

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