Question
The management at XYZ Corporation needs to know the profit per unit sold of a new product. The new product is priced to sell for
The management at XYZ Corporation needs to know the profit per unit sold of a new product. The new product is priced to sell for $45 per unit. The costs incurred in brining this new product to market are for production, labor, and transportation. Probability distributions for the purchase cost, labor cost, and transportation cost (all on a per unit basis) are as follows:
Purchase | Probability | Labor | Probability | Trans. | Probability |
Cost ($) | Cost ($) | Cost ($) | |||
10 | .25 | 20 | .10 | 3 | .75 |
11 | .45 | 22 | .25 | 5 | .25 |
12 | .30 | 24 | .35 | ||
25 | .30 |
Note: Profit= Selling Price - Purchase Cost - Labor Cost - Transportation Cost
1. Calculate and state the calculated profit per unit for the: a. base-case using the most likely task completion times. b. best-case c. worst-case
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