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Question Set 1. You are an inventory management consultant. You have been hired by Walmart to help optimize inventory management for their Dairy department. Your immediate task is building a Monte Carlo simulation for sales of Meat, Seafood and Produce. The probabilities of monthly demand levels are: Probability | Meat | Seatoud | Produce | om | ms | aw | ais | om | mss | au | 40 | [eos | ws | aw | a0 | The unit revenues and costs are given in the table below. [Produc | Unt even | Unicon | | Meat | $176 $1.08 $2.69 $1.88 $3.29 52.05 Each product has a separate display with an associated fixed monthly cost: [Product | Fixed Monthly Display Cost | Meat [so | $160 s240 1. (5pts) Build a table for the cumulative probability distribution for demand. It should be set up for use with the VLOOKUP function, with the cumulative probabilities on the left. 2. (15pts) Build a table for tracking sales over one year (Jan 2023-Dec 2023) with separate columns for Meat, Seafood and Produce. This will just be the randomized demand value for each item for each month (like in 10.1.2 from the lab exercise on Monte Carlo simulations). For this assignment, assume all demand is actually met (that is, sales = demand) and there is no other inventory loss except through sales. 3. (10pts) Build a table for tracking total revenues, costs, and profit for the year. This table should use the information provided in your answer to 2., above. Your table should calculate values for: «Total Revenue (based on the combined sales of all three products over the year) «Total Cost (also based on combined sales, and including cost of goods sold and fixed costs) « Profit/Loss (total revenue minus total costs) 4. (10pts) Create a data table to generate 50 runs of the simulation and calculate the average profit of the 50 simulation runs. As in previous assignments, this must be an actual data table structure to earn full credit. Calculate the average profit over the 50 simulation runs.

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Uploaded ImageQuestion Set 1. You are an inventory management consultant. You have been hired by Walmart to help optimize inventory management for their Dairy department. Your immediate task is building a Monte Carlo simulation for sales of Meat, Seafood and Produce. The probabilities of monthly demand levels are: Probability | Meat | Seatoud | Produce | om | ms | aw | ais | om | mss | au | 40 | [eos | ws | aw | a0 | The unit revenues and costs are given in the table below. [Produc | Unt even | Unicon | | Meat | $176 $1.08 $2.69 $1.88 $3.29 52.05 Each product has a separate display with an associated fixed monthly cost: [Product | Fixed Monthly Display Cost | Meat [so | $160 s240 1. (5pts) Build a table for the cumulative probability distribution for demand. It should be set up for use with the VLOOKUP function, with the cumulative probabilities on the left. 2. (15pts) Build a table for tracking sales over one year (Jan 2023-Dec 2023) with separate columns for Meat, Seafood and Produce. This will just be the randomized demand value for each item for each month (like in 10.1.2 from the lab exercise on Monte Carlo simulations). For this assignment, assume all demand is actually met (that is, sales = demand) and there is no other inventory loss except through sales. 3. (10pts) Build a table for tracking total revenues, costs, and profit for the year. This table should use the information provided in your answer to 2., above. Your table should calculate values for: «Total Revenue (based on the combined sales of all three products over the year) «Total Cost (also based on combined sales, and including cost of goods sold and fixed costs) « Profit/Loss (total revenue minus total costs) 4. (10pts) Create a data table to generate 50 runs of the simulation and calculate the average profit of the 50 simulation runs. As in previous assignments, this must be an actual data table structure to earn full credit. Calculate the average profit over the 50 simulation runs.

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Asked by: Veera manikanta
Created at: 2025-08-06 09:45:57

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Let's break down the steps and guide you on how to approach each requirement using **Excel** (or similar spreadsheet software): --- ### **1. Cumulative Probability Distribution Table** **Step 1:** List the probabilities in one column and calculate the cumulative probability in the next. | Probability | Cumulative Probability | Meat | Seafood | Produce | |-------------|-----------------------|------|---------|---------| | 0.05 | 0.05 | 184 | 268 | 288 | | 0.10 | 0.15 | 200 | 299 | 318 | | 0.15 | 0.30 | 224 | 302 | 330 | | 0.05 | 0.35 | 240 | 310 | 350 | | 0.15 | 0.50 | 258 | 345 | 362 | | 0.10 | 0.60 | 280 | 368 | 376 | | 0.15 | 0.75 | 318 | 378 | 392 | | 0.10 | 0.85 | 324 | 400 | 413 | | 0.10 | 0.95 | 358 | 411 | 450 | | 0.05 | 1.00 | 374 | 444 | 490 | **Note:** Cumulative probability is just a running total down the probability column. --- ### **2. Table for Tracking Sales Over One Year** **Step 2:** For each month (Jan-Dec), use a random number to select demand for each product. - Use `RAND()` to generate a random number between 0 and 1 for each product, each month. - Use `VLOOKUP(random number, cumulative probability table, demand column, TRUE)` to assign the correct demand. | Month | Meat | Seafood | Produce | |-------|------|---------|---------| | Jan | | | | | Feb | | | | | ... | | | | | Dec | | | | --- ### **3. Table for Tracking Revenues, Costs, Profit** **Step 3:** Calculate for the year (sum of months): - **Total Revenue** = SUM(Meat Sales x $1.76 + Seafood Sales x $2.69 + Produce Sales x $3.29) - **Total Cost** = SUM(Meat Sales x $1.08 + Seafood Sales x $1.88 + Produce Sales x $2.05) + Fixed Monthly Costs for each product (12 months x each product's fixed cost) - **Profit/Loss** = Total Revenue - Total Cost --- ### **4. Data Table for 50 Simulation Runs** **Step 4:** Create a table with 50 rows (one for each simulation run): - For each run, simulate the entire year using random numbers as before. - For each run, calculate total profit. - At the end, calculate the average profit across all 50 runs. | Simulation Run | Total Profit | |----------------|-------------| | 1 | | | 2 | | | ... | | | 50 | | **Average Profit** = AVERAGE(Total Profit column) --- ## **Summary of Steps in Excel** 1. **Build cumulative probability table** for VLOOKUP. 2. **Simulate sales for 12 months** using RAND() and VLOOKUP for each product. 3. **Calculate annual revenue, cost, and profit** for each simulation. 4. **Repeat for 50 runs** using a data table, and calculate the average profit. --- ### **Helpful Excel Functions** - `RAND()` - `VLOOKUP()` - `SUM()` - `IF()` - `AVERAGE()` --- **Let me know if you need a sample Excel template or formulas for any specific part!**

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