The probability of scenario 1 happening is 0.3, scenario 2 is 0.5 and scenario 3 is 0.2. For every ad sold Saunders makes $30,000 profit. Unsold ads are sold to local cable operations at a loss of $7000 each. If a customer is turned away due to shortage of ads, the goodwill loss for each customer request is estimated to be $1000 per ad. Using a two way data table with a random number generator and 1000 iterations each to analyze this problem. What will be the best policy for the Saunders Agency? (for the input row in the data table use values 30, 35, 40, 45, 50). Please show each step in an excel worksheet.
The Saunders Agency is planning to create ads for the whole season of a new reality show. They sell these ads to their customers throughout the season, as and when a customer requests for them subject to availability. Depending on off-screen scandals of the stars involved in the show, Saunders believes there are three possible scenarios. Scenario 1: A show star gets married to a rock star, another gets arrested for public indecency and two other stars have affairs. With this scenario the average demand for ads will be 40. Scenario 2: One of the three above mentioned incidents happen; the demand will be an average of 30. Scenario 3: None of the three situations mentioned in Scenario 1 happens, then the demand will be on average 20.
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