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Sanotronics is a startup company that manufactures medical devices for use in hospitals and clinics. They have developed a new device that improves the administration
Sanotronics is a startup company that manufactures medical devices for use in hospitals and clinics. They have developed a new device that improves the administration of chemotherapy treatments to cancer patients, and they would like to analyze the first-year profit potential of this device. Because of Sanotronics tight cash flow situation, management is particularly concerned about the potential for loss. They have identified the following key parameters: Selling price: $249 per unit Cost of parts: uniform distribution between $80 - $100 per unit Direct labor cost: Administrative and general costs: $1,000,000 Demand: Normally distributed with a mean =15,000 units and std dev = 4,500 units Using ONLY standard Excel functions (i.e., no @Risk add-in), simulate the first year profit of this device and answer the following questions: a) What is the expected profit for the first year? b) Sanotronics can be 90% certain that the first-year profit falls within what range? lower = , upper = c) What is the probability that Santronics will lose money on this product
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