Refer to the Outsource worksheet in the Quiz 12 spreadsheet file. What is the value of mean total manufacturing cost obtained from the simulation results? [Choose the nearest answer]

Select one:

a. $100,000

b. $60,000

c. $175,000

d. $110,000

Refer to the Big Pharma worksheet in the Quiz 12 spreadsheet file. What is the risk that the cumulative value after year 1will not be positive?? [Choose the nearest answer]

Select one:

a. 40%

b. 57%

c. 24%

d. 4%

Refer to the Outsource worksheet in the Quiz 12 spreadsheet file. What is the likelihood that the total manufacturing cost will be between $170,000 and $180,000? [Choose the nearest answer]

Select one:

a. 13%

b. 26%

c. 31%

d. 47%

Refer to the Outsource worksheet in the Quiz 12 spreadsheet file. What is the value of mean cost difference obtained from the simulation results? [Choose the nearest answer]

Select one:

a. $18,385

b. $6,673

c. $14,894

d. $23,946

Outsourcing Decision Model
Data
Manufactured in-house				We assume that the production (demand) volume is normally distributed with a mean of 1,000 and a standard deviation of 100. For the unit purchase cost, select the triangular distribution. It has a minimum value of $150, most likely value of $165, and a maximum value of $190. The number of trials per simulation is equal to 10,000.
Fixed cost	$50,000
Unit variable cost	$125
Purchased from supplier
Unit cost	$175
Production volume	1500
Model
Total manufacturing cost	$237,500
Total purchased cost	$262,500
Cost difference (Manufacture - Purchase)	-$25,000
Best Decision	Manufacture