# lab2 - Lab Exercise II ISE 3424 Discrete-Event Simulation...

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Lab Exercise II ISE 3424 – Discrete-Event Simulation Pasupathy, Spring 2010 In this lab exercise, we will understand the Milkvendor Problem in Excel, and approxi- mate the optimal solution to the problem. In the process, we will demonstrate why simply substituting random variables by their mean values can provide grossly inaccurate results. The Milkvendor Problem : Suppose a milkvendor buys x gallons of milk each day — the cost-price is c = 1 . 90 dollars per gallon, and the selling price is s = 2 . 75 dollars per gallon. Say he disposes any leftover milk at the end of the day for v = 0 . 30 dollars per gallon. Customers arrive through the day to purchase milk. Let the random variable D represent the total demand for milk on any particular day. Assume that D is uniformly distributed between 0 and 100 gallons. Our objective is to identify that quantity x which maximizes the milkvendor’s expected proFt. We will now understand this problem better by simulating it in Excel.

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## This note was uploaded on 02/22/2010 for the course ISE 3424 taught by Professor Raghupasupathy during the Spring '10 term at Virginia Tech.

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lab2 - Lab Exercise II ISE 3424 Discrete-Event Simulation...

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