O’Brien Chemicals makes three types of products: industrial cleaning, chemical treatment, and some miscellaneous products. Each is sold in 55-gallon drums. The selling price and unit manufacturing cost are shown below:

Fixed costs are assumed normal with a mean of $5 million and a standard deviation of $20,000. Demands are all assumed to be normally distributed with the following means and standard deviations:

The operations manager has to determine the quantity to produce in the face of uncertain demand. One option is to simply produce the mean demand; depending on the actual demand, this could result in a shortage (lost sales) or excess inventory. Two other options are to produce at a level equal to either 75% or 90% of the demand (i.e., find the value so that 75% or 90% of the area under the normal distribution is to the left). Using Monte Carlo simulation, evaluate and compare these three policies and write a report to the operations manager summarizing your finding.