Case: Monte Carlo Simulation

Problems
A small supermarket is trying to determine how many copies of
Newsweek magazine they should order each week. They
believe their demand for Newsweek is governed by the
following discrete random variable

DEMAND PROBABILITY

15 0.10

20 0.20

25 0.30

30 0.25

35 0.15
Problems (cont.)
The supermarket pays $1.00 for each copy of Newsweek and sells
each copy for $1.95. They can return each unsold copy of
Newsweek for $0.50. How many copies of Newsweek should
the store order to maximize its profit?