Question

1. The DoubleDown Donut shop has decided to produce 15 dozen of its favorite chocolate donut every day. The shop manager has gathered data for a few months and found the distribution of demand is as follows:

Daily Demand (dozens)	Probability
5	.15
10	.25
15	.40
20	.20

Each dozen costs DoubleDown $5.60 to produce and is sold for $9.99. Any leftover donuts at the end of the day are sold to a local homeless shelter for $3.00 per dozen.

• Create a simulation model to calculate daily profit. The profit model should be similar to those that were set up for Ch 10, however run them horizontally – each day on a separate row.

• Simulate 30 days (a month) of operation.

• Calculate the monthly profit

• Replicate the simulation 12 times

• Calculate the average monthly profit using the results of the replications

Chapter 14

Answer 1

Simulation model is as follows:

EXCEL FORMULA:

Simulation formulas are dragged and copied for 30 days

Repeat the simulation 12 times by pressing F9 button and note down the Monthly profit for each simulation trial.

Trial	Monthly Profit
1	1311.45
2	1346.4
3	1381.35
4	1451.25
5	1521.15
6	1486.2
7	1416.3
8	1241.55
9	1591.05
10	1136.7
11	1206.6
12	1626

Average monthly profit = Average of 12 simulation trials

= $ 1393