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A manufacturer of Bluetooth headphones examines the historical demand of its product and learns that the average monthly demand is about 3,470 headphones but varies
A manufacturer of Bluetooth headphones examines the historical demand of its product and learns that the average monthly demand is about 3,470 headphones but varies between 2,430 and 4,270 headphones. Each pair of the headphones has a retail price of $110. The monthly fixed production cost ranges from $3,900 to $8,500, with an average of $8,000. The average variable cost of producing a pair of headphones is $52, but because the manufacturing process is not fully automated, the variable cost may vary between $48 and $63 per pair. Develop a risk analysis model to answer the following questions. a. What is the monthly profit from the Bluetooth headphones for the most likely, pessimistic, and optimistic scenarios? Answer is complete but not entirely correct. b. The company notices that during the holiday season in December, the demand tends to be higher than in other months. Historically, the demand in December is about 3,958 pairs on average, but also ranges from 2,615 to 4,927 pairs. What is the December profit for the most likely, pessimistic, and optimistic scenarios? Answer is complete but not entirely correct
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