1.

Consider a Sandwich seller who has to decide on the number of sandwiches

he must buy everyday so as to maximize his daily total profits. The demand in this
case is of a variable nature. If the seller buys more units than he can sell, then the
unsold sandwich is a waste, reflecting loss to him. On the other hand, if he buys
less units than the demand, then there is an opportunity cost involved. i.e.; he
losses the opportunity to sell additional units of sandwich and hence his profit is
not maximized.

Suppose, the cost price per unit is Dh. 5 and the sales price per unit is Dh. 8.
Let us assume that each day the demand is from 21 to 27. The sandwich seller
wishes to know whether he must buy 23 units or 25 units everyday to maximize his
profits.

By Monte Carlo simulation, evaluate the different buying strategies of the

sandwich-seller.

2. An ice-cream parlor's record of previous months sale of a particular variety

of ice cream as follows (see Table).

Table: Simulation of Demand Problem

Simulate the demand for first 10 days of the month