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Newspaper Purchase Optimization

The document describes a newspaper seller's problem of determining the optimal number of papers to purchase each day. It provides the costs, selling prices, and probabilities of different demand levels. A simulation is run for 20 days, recording profits from sales and excess or leftover papers. The optimal number is found by calculating profit as the difference of revenue, costs, lost profit from unmet demand, and salvage value of leftover papers. Random numbers are used to simulate demand levels and types of days over the 20 days.

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shashwat2010
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123 views12 pages

Newspaper Purchase Optimization

The document describes a newspaper seller's problem of determining the optimal number of papers to purchase each day. It provides the costs, selling prices, and probabilities of different demand levels. A simulation is run for 20 days, recording profits from sales and excess or leftover papers. The optimal number is found by calculating profit as the difference of revenue, costs, lost profit from unmet demand, and salvage value of leftover papers. Random numbers are used to simulate demand levels and types of days over the 20 days.

Uploaded by

shashwat2010
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

Shashwat Shriparv

dwivedishashwat@[Link]
InfinitySoft
Problem :

To determine the optimal no: of papers


the newspaper seller should purchase.
Solution:

Simulating demands for 20 days and


recording profits from sales each day.
Problem Description
Cost price = 33 cents

Selling price = 50 cents

Newspaper not sold at the end of the day are sold as


scrap for 5 cents

Newspaper can be purchased in bundles of 10.


Three types of news days
&corresponding probabilities

Good(0.35)
Fair(0.45)
Poor(0.20)
Profit ?

Profit = [ ( revenue from sales ) –


( cost of newspapers ) –
( lost profit from excess demand ) +
( salvage from sale of scrap papers ) ]
Demand Probability Distribution
Demand Good Fair Poor

40 0.03 0.10 0.44


50 0.05 0.18 0.22
60 0.15 0.40 0.16
70 0.20 0.20 0.12
80 0.35 0.08 0.06
90 0.15 0.04 0.00
100 0.07 0.00 0.00
Types of Cumulative Random-
Newsday Probability Probability Digit
Assignment

Good 0.35 0.35 01-35

Fair 0.45 0.80 36-80

Poor 0.20 1.00 81-00


Cumulative Random-Digit
Demand Distribution Assignment
Good Fair Poor Good Fair Poor

40 0.03 0.10 0.44 01-03 01-10 01-44


50 0.08 0.28 0.66 04-08 11-28 45-66
60 0.23 0.68 0.82 09-23 29-68 67-82
70 0.43 0.88 0.94 24-43 69-88 83-94
80 0.78 0.96 1.00 44-78 89-96 95-00
90 0.93 1.00 1.00 79-93 97-00
100 1.00 1.00 1.00 94-00
Shashwat Shriparv
dwivedishashwat@[Link]
InfinitySoft

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