1. In November, Jeff Hastings faces the task of committing to specific production quantities for each skiwear item the company will offer in the coming year's line. Commitments are needed immediately, in order to reserve space in production facilities located throughout Asia. Actual demand for these products will not become known for at least six months. In an initial experiment, Jeff has asked six of his most knowledgeable people to make forecasts of demand for the various models of parkas. The six forecasts of demand for one product come as follows:
#1: 900
#2: 1000
#3: 900
#4: 1300
#5: 800
#6: 1200
Avg: 1017
Std Dev: 194
Jeff believes that the actual demand will follow a normal distribution with a mean being the average of the six forecasts that he collected from his people and with a standard deviation being twice as high as the standard deviation given by the six forecasts above. He plans to sell the product at $110 per unit and the unit production cost is 75% of its selling price. In case of any unsold inventories, he can salvage it at a price which is equal to 8% of the selling price.
Suppose that Jeff decides to produce the average amount of the six forecasts for the product under consideration. Use Analytic Solver Platform to perform 2000 trials of a computer simulation on a spreadsheet to forecast the total profit and the number of leftover units. In your submission, please include a copy of your model in Excel. For each result forecasted, include a copy of the frequency chart (histogram) in your write-up.