I have solved most of question and the answers I have so far are correct, I...

I have solved most of question and the answers I have so far are correct, I just need help finding out the lower bound and upper bound

(All answers were generated using 1,000 trials and native Excel functionality.)

Galaxy Co. distributes wireless routers to Internet service providers. Galaxy procures each router for $75 from its supplier and sells each router for $125. Monthly demand for the router is a normal random variable with a mean of 100 units and a standard deviation of 20 units. At the beginning of each month, Galaxy orders enough routers from its supplier to bring the inventory level up to 100 routers. If the monthly demand is less than 100, Galaxy pays $15 per router that remains in inventory at the end of the month. If the monthly demand exceeds 100, Galaxy sells only the 100 routers in stock. Galaxy assigns a shortage cost of $30 for each unit of demand that is unsatisfied to represent a loss-of-goodwill among its customers. Management would like to use a simulation model to analyze this situation.

A) What is the average monthly profit resulting from its policy of stocking 100 routers at the beginning of each month? Round your answer to the nearest whole number. $_4246_

B) What is the proportion of months in which demand is completely satisfied? _52_%

C) Use the simulation model to compare the profitability of monthly replenishment levels of 100, 120, and 140 routers. Which monthly replenishment level maximizes profitability? _120_

Use the corresponding 95% confidence intervals on the average profit to make your comparison.

Lower Bound: $_________

Upper Bound: $_________

Solutions

Expert Solution

Average monthly profit (without standard deviation) = $ 5000

Average monthly profit (with standard deviation) = $4232.90 ~~ $4233

Proportion of months in which demand is completely satisfied = 51.5%

Replenishment Levels which maximises profit = 120

Few values i can post :

Random Stimulation Values	Profits	if met =1 else 0
101.9304002	4942.088	1
66.17494165	2801.371	0
128.2729387	4151.812	1
130.4832516	4085.502	1
78.93913172	3631.044	0
114.5828759	4562.514	1
98.60604275	4909.393	0
127.3621202	4179.136	1
71.95203555	3176.882	0
131.9541071	4041.377	1
69.33289526	3006.638	0
72.6423572	3221.753	0
78.11331636	3577.366	0
87.67720695	4199.018	0
101.8860372	4943.419	1
92.74518023	4528.437	0
142.5275158	3724.175	1
93.6380548	4586.474	0
75.1193247	3382.756	0
75.52589322	3409.183	0
98.71480769	4916.462	0

Its not allwoing me to post all 1000 values because of sze, I can send those values in case needed for you.

keosha answered 7 months ago

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