News dealer’s problem

Example
A news dealer buys papers for 33 cents each and sells them for 50
cents each. Newspapers not sold at the end of the day are sold as scrap
for 5 cents each. Newspapers can be purchased in bundles of 10. Thus,
the newsstand can buy 50 or 60 or 70 papers, and so on. The order
quantity ,Q, is the only policy decision. Unlike some inventory
problems, the order quantity Q is fixed since ending inventory is
always zero due to scrapping leftover papers.
There are three types of newsdays: “ good ”, ” fair ” and “ poor ”,
but the news dealer cannot predict which type will occur on any given
day. Find the optimal number of papers the newsstand should
purchase.
77 49
94

20 15
80
 Demand * 50 cent If demand > 70
Max. 70 (Demand – 70)*17

Demand * 33 cent If demand < 70

RN Max. 70 (70 - demand)*5

RN

60 * 50 cent 10* 5 cent

50 * 50 cent 20 * 5 cent

70 * 50 cent 20* 17 cent

Total = 33.6 $
Note: The cost of 70 newspaper = 70*33 cent= 2310 cent = 23.1 $
Day 1 (demand 60)
60*50 - 70*33 + 10*5 = 740 cent

Day 5 (demand 90)

70*50 - 70*33 - 20*17 = 850
cent

(demand 70)
70*50 - 70*33 = 1190
cent
Note the highest profit when demand = purchased by dealer
Section
Simulate the previous example for 10 days where
the newsstand purchases 50 ,60 and 70 papers daily,
then decide which bundle the newsstand purchase to
fulfill the highest profit.

RNs