Susan Seedhead sells fresh roses at the airport, daily. Roses cost her $0.3 each and she sells them for $0.8. There is no salvage value for unsold roses. Susan believes that the size of her rose display affects her demand. The number of roses she has at the beginning of the day is n. Daily demand follows a normal distribution with = Mean (400+n/20) Standard deviation (50+n/10) How many roses (n) should she start the day with, either 300, 350, or 450? Develop a simulation model to answer these questions. Develop your analysis so that the 99.73% Margin of Error for the Confidence Interval is less than 1.0. Hint: to check your model, evaluate it when initial inventory equals 0 and when initial inventory equals 1,500. In both these cases, expected profit is zero or negative.

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Susan Seedhead sells fresh roses at the airport, daily.
Roses cost her $0.3 each and she sells them for $0.8. There is no salvage ,
value for unsold roses.
Susan believes that the size of her rose display affects her demand. The
number of roses she has at the beginning of the day is n.
Daily demand follows a normal distribution with
Mean = (400+n/20)
Standard deviation (50+n/10)
How many roses (n) should she start the day with, either 300, 350, or
450?
Develop a simulation model to answer these questions. Develop your
analysis so that the 99.73% Margin of Error for the Confidence Interval is
less than 1.0.
Hint: to check your model, evaluate it when initial inventory equals 0 and
when initial inventory equals 1,500. In both these cases, expected profit is
zero or negative.
300
450
350
Transcribed Image Text:Susan Seedhead sells fresh roses at the airport, daily. Roses cost her $0.3 each and she sells them for $0.8. There is no salvage , value for unsold roses. Susan believes that the size of her rose display affects her demand. The number of roses she has at the beginning of the day is n. Daily demand follows a normal distribution with Mean = (400+n/20) Standard deviation (50+n/10) How many roses (n) should she start the day with, either 300, 350, or 450? Develop a simulation model to answer these questions. Develop your analysis so that the 99.73% Margin of Error for the Confidence Interval is less than 1.0. Hint: to check your model, evaluate it when initial inventory equals 0 and when initial inventory equals 1,500. In both these cases, expected profit is zero or negative. 300 450 350
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