B C D G Q S Acme Summary Statistics Bin The management of Acme Manufacturing Company is considering the introduction of a new Selling Price per Unit $50 -60000 product. Fixed Cost $100,000 Sample Size 40000 The fixed cost to begin the production of the product is $100,000. Mean Profit -20000 The variable cost for the product is uniformly distributed between $20 and $28 per unit. Variable Cost (Uniform Distribution) Standard Deviation 0 Demand for the product is best described by a normal probability distribution with a mean of 5000 Lower bound $20 Minimum Profit 20000 units and a standard deviation of 1250 units. Upper bound $28 Maximum Profit 40000 (a) Perform a simulation of 500 trials. Count of Losses 60000 (b) What are the mean variable cost/unit and mean demand from the simulation? Probability of Loss 80000 (c) What are the mean and standard deviation of the profit from the simulation? Demand (Normal Distribution) Value at risk (at 5%) 100000 (d) Create a histogram showing the profit distribution. Mear 5000 120000 (e) What is the probability the product will result in a loss? Standard Dev 1250 140000 (f) What is the value at risk (at 5%)? 160000 g) Suppose Acme wants to introduce the product only if probability of loss is no more than 10%. 180000 6 (Selling price - Unit VC) Dmd - FC Based on this, what is your recommendation? Simulation Trials (1) (2) (3) (4) (5) (6) 8 Random Variable Cost Random 19 Trial Number per Unit Number Demand Profit 0.005 0.853 0.969 0.630 0.253 To create the histogram, you can use Data 0.385 0.556 0.225 Analysis add-in or Frequency function. 0.965 0.643 0.537 0.241 0.268 0.345 0.604 0.280 Recommendation? 0.301 0.052 10 0.243 0.873 496 0.409 0.655 497 0.544 0.458 498 0.200 0.822 499 0.452 0.468 500 0.758 0.453 Average #DIV/O! #DIV/O! #DIV/O