Problem:

• A classical Inventory problem concerns the purchase and sale of the newspaper.

• The paper seller buys papers for 33 cents each and sells them for 50 cents each. (the lost profit from excess demand is 17 cents for each paper demanded that could not be provided.)

• Newspapers not sold at the end of the day are sold as scrap for 5 cents each. (the salvage value for scrap paper)

• Newspaper can be purchased in bundles of 10. Thus, the paper seller can buy 50,60, and so on.

• There are three types of Newsday’s, “good”, “fair” and “poor” with probabilities of 0.35, 0.45, and 0.20 respectively.

• The problem is to determine the optimal number of papers the newspaper seller should purchase.

• This will be accomplished by simulating demands for 20 days and recordings profits from sales each day.

• The distribution of paper demanded on each of these days is given in Table 1.

• Table2 and 3 provide the random digit assignments for the types of Newsday’s and the demand for those Newsday’s

Random Digit for Newsday: 94,77,49,45,43,32,49,100,16,24,31,14,41,61,85,08,15,97,52,78

Random Digit for demand: 80,20,15,88,98,65,86,73,24,60,60,29,18,90,93,73,21,45,76,96