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QUESTION

A mail order company is planning a direct mail campaign. The fixed cost of designing the special catalog is $20,000.

70% 0.03

When a customer responds and places an order the dollar value of the orders is expected follow a normal distribution with a mean of $150 and a standard deviation of $15. The variable cost of each of these orders is expected to follow uniform distribution between 70% and 85% of the dollar amount of each order.

a.      Setup a Monte Carlo simulation model for the total profit for a single mailing campaign with 100,000 as the number of catalogs printed and mailed. Use native Excel functions such as VLOOKUP and NORM.INV, etc., wherever appropriate.

b.     Using the Data/Table approach run 100 replications and make a summary of the replication results.

c.      Need help preparing a histogram and box-plot for replication results.

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