Problem
Eureka, a local venue is getting ready for the summer concert season. They want to purchase reusable plastic water bottles to sell to concert attendees. Bottles cannot be reused as they will be customized with that week's artist and date. The expectation for this upcoming concert is a demand for 3000 bottles with a standard deviation of 600.
The bottles sell for $20.00 each and cost Eureka $12 per bottle. In the event some bottles are left over after the concert, a local radio station has indicated that they will purchase some of the leftover bottles for $15 per bottle for use in promotions, but they have not committed to any particular number that they will buy. Eureka estimates a 5% chance that the radio station will purchase no bottles, a 10% chance they purchase 150, a 40% chance they purchase 175, a 30% chance they purchase 225, and a 15% chance they purchase 275.
If Erueka has any leftover bottles that are not purchased by the radio station, then will have to pay $5 per bottle as a disposal fee.
Compare ordering quantities of 2000 to 4000 in increments of 200, running 1000 iterations of the model for each order quantity. Analyze your results to determine the best ordering quantity to maximize profit (total revenue from both the concert attendees and the ratio station - the cost of buying the bottles and the costs of disposing of any left)