Business Analytics Exercise

A manufacturer of a smartphone battery estimates that monthly demand follows a normal distribution with a mean of 300 units and standard deviation of 26. Material cost is uniformly distributed between $7.00 and $8.50. Fixed costs are $2,700 per month, regardless of the production rate. The selling price is $15 per unit.

a. Using Excel, both with a seed of 1, to simulate 1,000 trials to estimate the expected monthly profit and standard deviation. Demand values need to be rounded to integers, and use two decimal places for the material cost.

b. In the same Excel document, answer: what are the best and worst profit scenarios for the company?