1. (50) Bearcat Air (BA) is a small regional airline based in Cincinnati. Each month its fleet of planes uses 10,000 gallons of jet fuel. The current price of jet fuel is $3.00 per gallon, but this price fluctuates randomly each month. The percentage change in the price of jet fuel from one month to the next is uniformly distributed between -10% and +10%.
- (40) Construct a simulation model using Python in a jupyter notebook to evaluate Bearcat Air’s total jet fuel cost over the next 12 months.
- (5) Using a sample of 1,000 trials compute a 90% confidence interval for the mean total jet fuel cost over the next 12 months.
- (5) Bearcat Air’s jet fuel supplier has offered a fixed price contract at $3.00 per gallon for the next 12 months. Would you recommend Bearcat Air accept this fixed price contract? Provide an explanation with supporting analysis to justify your recommendation.
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