Problem 12-02 (Algorithmic)

The management of Madeira Manufacturing Company is considering the introduction of a new product. The fixed cost to begin the production of the product is $25,000. The variable cost for the product is expected to be between $20 and $31 with a most likely value of $26 per unit. The product will sell for $35 per unit. Demand for the product is expected to range from 300 to 1900 units, with 1100 units the most likely demand.

	Let	c =	variable cost per unit
		x =	demand

1. Develop the profit model for this product. Enter your answer in the form of an expression. (Example: (c+10)x+800) Profit =
2. Provide the base-case, worst-case and best-case analyses. For those boxes in which you must enter subtractive or negative numbers use a minus sign. (Example: -300)

   	Base case:	Profit =	$
   	Worst case:	Profit =	$
   	Best case:	Profit =	$

3. Discuss why simulation would be desirable. A simulation the probability of each scenario.