Suppose You Run a Simulation Model Several Times with Different

question 73

Multiple Choice

Suppose you run a simulation model several times with different order quantities.What can we infer about the the quantity that maximizes the output,the company's profit?

• A)This quantity is the optimal order quantity.
• B)This quantity might be the optimal order quantity,but we also need to consider the company's attitude toward risk.
• C)This is not necessarily the optimal order quantity,because it may have produced the largest profit by luck.
• D)We can't infer anything.

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Definitions:

DAX-30 Index Futures

Financial contracts to buy or sell the DAX 30 index at a future date, used for hedging or speculating on the German stock market.

Spot Index

A real-time index that reflects the current prices of the securities included in the index.

Arbitrage Profit

The gain obtained from the simultaneous purchase and sale of the same or equivalent assets or commodities in different markets or in derivative forms.

Selling Short

The investment strategy of selling securities one does not currently own, with the expectation of buying them back later at a lower price.