Need detail solutions Problem 2 A retailer sells a perishabl

Need detail solutions!!!!!!

Problem 2: A retailer sells a perishable item and orders Q units every day. Each sold unit generates a profit of S0.60 and units not sold by the end of the day results in a loss of $0.40. The demand, D, on any day is uniformly distributed over 180, 140]. Develop a model to determine the number of units the retailer should order to maximize profit. Solve, using simulation.

Solution

Use Simulation

• Let P denote profit. Then P = ½ 0.6Q if D Q 0.6D 0.4(Q D) if Q > D

• Set Q = 80

• Generate n replications of D

• For each replication, compute the profit or loss, Pi

• Estimate E[P] with PPi/n

• Repeat for different values of Q

• Select the value that gives the biggest estimated profit