The simulation of Walton's bookstore is used to analyze the cost data, demand, and decision variables to determine the potential profit and risks associated with the business. The simulation is run for a set number of iterations, in this case 5000, to gather a large sample of data and accurately assess the potential outcomes. The demand for the bookstore is assumed to follow a normal distribution with a mean of 175 and a standard deviation of 50. The cost data includes the unit cost of $7.50, the unit price of $10.00, and the unit refund of $2.50. The decision variable is the order quantity, which is set at 150.
The data table generated from the simulation includes the minimum profit, maximum profit, mean profit, probability of profit being less than $200, probability of losing more than $742.50, and probability of making more than $375.00. The results of the simulation indicate that the mean profit is $299.48, with a probability of 17.2% of profit being less than $200 and a probability of 8.6% of losing more than $742.50. These results can be used to make informed decisions about the business and assess the potential risks and rewards.