Calculate the average profit for quantity of shirts

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Reference no: EM132075675

Make a Splash T-Shirts is planning to print and sell specially designed tee shirts for the upcoming World Series. The shirts will cost $12 each to produce and can be sold for $30 each until the World Series. After the World Series, the price will be reduced to $20 per shirt. The demand at the $30 price is expected to be normally distributed, with a mean of 12,000 shirts and a standard deviation of 2,500 shirts. The demand for the $20 price is expected to be normally distributed, with a mean of 5,000 shirts and a standard deviation of 1,000 shirts. Any shirts left over will be discarded. Because of the high setup costs, Make a Splash T-Shirts is planning on producing one run of 17,000 shirts. In your model use integers for all demands.

(a) Simulate N setups to calculate the average profit for this quantity of shirts.

(b) Make a Splash T-Shirts would like to evaluate producing 16,000, 17,000, 18,000, 19,000, and 20,000 shirts. Which would you recommend? Why?

Reference no: EM132075675

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