Suppose that Walton Bookstore must order two different calendars. To simplify the example, we assume that the calendars each have the same unit cost, unit selling price, and unit refund value as in...

Suppose that Walton Bookstore must order two different calendars. To simplify the example, we assume that the calendars each have the same unit cost, unit selling price, and unit refund value as in previous examples. Also, we assume that each has a triangularly distributed demand with parameters 100, 175, and 300. However, we now assume they are substitute products, so that their demands are negatively correlated. This means that if a customer buys one, she is not likely to buy the other. Specifically, we assume a correlation of –0.9 between the two demands. How does this correlation affect the distribution of profit, as compared to the situation where the demands are uncorrelated (correlation 0) or very positively correlated (correlation 0.9)?

Objective To see how @RISK enables us to simulate correlated demands, and to see the effect of correlated demands on profit.