A local computer store is running a sale on the first 99 flat panel monitors sold. There is an equally likely chance of 0-99 units being sold. Each monitor cost $250, and profit is $10 per monitor sold
That is, profit equals -$250 + $10X, where X = the number of monitors sold. The mean amount you would expect to sell is 49.5 units.
(a) Calculate the expected profit.
(b) Simulate the sale of 10 items, using the following double digit random numbers: 47, 77, 98, 11, 02, 18, 31, 20, 32, 90.
(c) Calculate the average profit in (b) above, and compare with the results of (a) above.
(a) expected value = -250 + 10(49.5 ) = $245
(b) -250 + $10(47 ) = $220
-250 + $10(77 ) = $520
-250 + $10(98 ) = $730
-250 + $10(11 ) = -$140
-250 + $10(02 ) = -$230
-250 + $10(18 ) = -$70
-250 + $10(31 ) = $60
-250 + $10(20 ) = -$50
-250 + $10(32 ) = $70
-250 + $10(90 ) = $650
c) The average profit of these simulated sales is $176. If the sample size were larger, we would expect the two values to be closer.
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