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Nowlin Plastics produces a line of cell phone covers. Nowlin's best-selling cover is its Viper model, slim but very durable black and gray plastic cover.
Nowlin Plastics produces a line of cell phone covers. Nowlin's best-selling cover is its Viper model, slim but very durable black and gray plastic cover. The annual fixed cost to produce the Viper cove is $234,000. This fixed cost includes management time and other costs that are incurred regardles of the number of units eventually produced. In addition, the total variable cost, including labor and material costs, is $2 for each unit produced. Nowlin is considering outsourcing the production of some products for next year, including the Viper. Nowlin has a bid from an outside firm to produce the Viper for some expensive cost per unit Although it is more expensive per unit to outsource the Viper, the fixed cost can be avoided if Nowlin purchases rather than manufactures the product. Next year's exact demand for Viper is not yet known. Nowlin Plastic is currently seeking to maximize the profit of its products. They have two options fo sourcing their products: one is to produce them in-house, and the other is to purchase the original products through outsourcing. Each of these product sources has different costs. Firstly, for manufacturing, the cost is divided into two parts: a fixed cost of $234,000 and a production cost of $2 per unit. For outsourcing, the cost varies because different manufacturers provide different quotations, ranging from $2.5 to $3.5. Additionally, the total cost is influenced by the quantity. The higher the quantity, the higher the co Nowlin Plastic is uncertain about the future quantity, which, according to market research, follows normal distribution with a mean of 150,000 and a standard deviation of 40,000 . Now, Nowlin Plastic wants to know how much money they can save by completely avoiding produ manufacturing and only purchasing the original products through outsourcing. The amount of savings is also expected to be related to the quantity. To address this issue, we need to first check their historical data to looking for the relationship between quantity and saving due to outsourcing. However, Nowlin Plastic does not have much historical data. Therefore, we can only use Monte Carlo Simulation to generate some data and explore the correlation between "Savings Due to Outsourcing" and "Quantity." Please submit the screenshots of the 1) linear regression scatterplot, 2) the statistic summary, as well as 3) uploading the Excel file by clicking "insert" -> "document" -> "upload document
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