Question

please show the excel file created and equations used to do so. thank you!

Problem 2: Freddie's Newsstand - decision making Consider the following problem being faced by a newsboy named Freddie. One of the daily newspapers that Freddie sells from his newsstand is the Financial Journal. A distributor brings the day's copies of the Financial Journal to the newsstand early each morning. Any copies unsold at the end of the day are returned to the distributor the next morning. However, to encourage ordering a large number of copies, the distributor does give a small refund for unsold copies. Here are Freddie's cost figures. Freddie pays $1.50 per copy delivered. Freddie sells it at $2.50 per copy. Freddie's refund is $0.50 per unsold copy. Partially because of the refund, Freddie always has taken a plentiful supply. However, he has become concerned about paying so much for copies that then have to be returned unsold, particularly since this has been occurring nearly every day. He now thinks he might be better off by ordering only a minimal number of copies and saving this extra cost. To investigate this further, he has compiled the following record of his daily sales. Freddie sells anywhere between 40 and 70 copies inclusively on any given day. The frequency of the numbers between 40 and 70 are roughly equal. (Tip: Use RANDBETWEEN(40,70) Excel function) The decision that Freddie needs to make is the number of copies to order per day from the distributor. Perform an Excel spreadsheet simulation with 5000 replications to help Freddie make his decision.

Answer 1

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Cost Revenue Refund 1.5 Per Copy Bought from Distrutor to sell it later to Readers 2.5 Per Copy Sold to Readers 0.5 Per Copy Unsold and Returned to Distributor Formula for first simulation given below: Serial NumberRANDBETWEEN(40,70) RANDBETWEEN(0,B6) B8-C8 No Number Ordered Daily Number Sold Number Unsold Cost Total Revenue Total Income before Refund Refund Total Net Income 10 21 32 81 100.5 78 97.5 75 100.5 32 2 57.5 -43 27 52.5 52 42 10 105 4 2.5 115 72.5 130 87.5 42 4 38 12 -28 52 35 11.5 102 100.5 12 12 31 -32 10 49 122.5
Note that in above simualtions,

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This gives following:

-COUNTIE(SBS8:SBS5007,KB) Number of Days :SUMIF($BS8SB$5007,KB,$1$&SIS5007) Total Income -M8/L8 Average Daily Income From 40 to 70 Ranked_Ordered 151 152 165 138 173 161 172 145 2.834437086 1.157894737 -1.793939394 2.913043478 0.115606936 0.652173913 3.011627907 1.193103448 428 176 -402 20 105 518 173 43 45 47 Average Daily Income 49 10 24 52 8 53 54 55 4 57 58 0 10 20 30 5060 70 80 3 60 2 61 -4 16 2.251612903 0.117647059 8.362637363 1.044025157 0.984615385 -2.595505618 7.939759036 3.56 63 155 170 182 159 130 178 166 349 20 1522 166 1318 534 69 70

Hence, looking at the plot, one can conclude that:

Freddie can start ordering only 65 newspapers to avoid any extra cost since that gives the maximum profit in long run, as compared to 70 newspapers or less.

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