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The management of Brinkley Corporation is interested in using simulation to estimate the profit per unit for a new product. The selling price for the product will be $45 per unit. Probability distributions for the purchase cost, the labor cost, and the transportation cost are estimated as follows: Procurement Labor Transportation Cost ($) Probability Cost ($) Probability Cost ($) Probability 10 0.25 20 0.10 3 0.75 11 0.45 22 0.25 5 0.25 12 0.30 24 0.35 25 0.30 a. Compute profit per unit for the base-case, worst-case, and best-case scenarios. Profit per unit for the base-case: $ Profit per unit for the worst-case: $ Profit per unit for the best-case: $ b. Construct a simulation model to estimate the mean profit per unit. If required, round your answer to the nearest cent. Mean profit per unit = $ c. Why is the simulation approach to risk analysis preferable to generating a variety of what-if scenarios? The input in the box below will not be graded, but may be reviewed and considered by your instructor. d. Management believes the project may not be sustainable if the profit per unit is less than $5. Use simulation to estimate the probability the profit per unit will be less than $5. If required, round your answer to two decimal places. The management of Brinkley Corporation is interested in using simulation to estimate the profit per unit for a new product. The selling price for the product will be $45 per unit. Probability distributions for the purchase cost, the labor cost, and the transportation cost are estimated as follows: Procurement Labor Transportation Cost ($) Probability Cost ($) Probability Cost ($) Probability 10 0.25 20 0.10 3 0.75 11 0.45 22 0.25 5 0.25 12 0.30 24 0.35 25 0.30 a. Compute profit per unit for the base-case, worst-case, and best-case scenarios. Profit per unit for the base-case: $ Profit per unit for the worst-case: $ Profit per unit for the best-case: $ b. Construct a simulation model to estimate the mean profit per unit. If required, round your answer to the nearest cent. Mean profit per unit = $ c. Why is the simulation approach to risk analysis preferable to generating a variety of what-if scenarios? The input in the box below will not be graded, but may be reviewed and considered by your instructor. d. Management believes the project may not be sustainable if the profit per unit is less than $5. Use simulation to estimate the probability the profit per unit will be less than $5. If required, round your answer to two decimal places.
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Answer rating: 100% (QA)
a Base Case Worst Case and Best Case Profit Base Case Average Costs Procurement Cost 10 20 22 24 4 19 Labor Cost 12 25 2 1850 Profit per unit Selling ... View the full answer
Related Book For
Essentials of Business Analytics
ISBN: 978-1285187273
1st edition
Authors: Jeffrey Camm, James Cochran, Michael Fry, Jeffrey Ohlmann, David Anderson, Dennis Sweeney, Thomas Williams
Posted Date:
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