Simulation When There Are Sales Constraints (Computer Required): Excelsior Corporation has five products, A, B, C. D. and E. Relevant data for these products are as follows:

The standard deviation of each item in the list, except the sales limit, is equal to 25 percent of the expected value of the item. Aggregate sales of all products cannot exceed $1.5 million.

Required:

a. What is the expected profit from all products?

b. Use a simulation package on a computer to simulate the probabilistic behavior of each of the variables, assuming that they are normally distributed. Run the simulation for 100 iterations. What is the expected sales volume and profit for all products?

c. Expand the program to incorporate the maximum sales constraints. Using the same simulation data from requirement b show the expected sales volume and profits.

d. Comment on the differences in results for each of the three items listed above.

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Expected Value of: Product Price Variable Cost Maximum Sales Expected Sales ABCDE $15 $ 6 14 18 25 17 6 68872 20,000 units 15,000 units 50,000 17.000 19,000 18,500 10,000 10,000 2 30,000 26,000