The management of Acme Manufacturing Company is considering the introduction of a new product. The fixed cost to begin the production of the product is $100,000. The variable cost for the product is uniformly distributed between $20 and $28 per unit. Demand for the product is best described by a normal probability distribution with a mean of 5000 units and a standard deviation of 1250 units. (a) Perform a simulation of 500 trials. (b) What are the mean variable cost/unit and mean demand from the simulation? (c) What are the mean and standard deviation of the profit from the simulation? (d) Create a histogram showing the profit distribution. You can use the given bins for the upper limits. (e) What is the probability the product will result in a loss? (f) What is the value at risk (at 5%)? (g) Suppose Acme wants to introduce the product only if probability of loss is no more than 10%. Based on this, what is your recommendation? Selling Price per Unit Fixed Cost Variable Cost (Uniform Distribution) Lower bound Upper bound Demand (Normal Distribution) Mean Standard Dev Simulation Trials (1) Average Trial 1 2 3 4 5 496 497 498 499 500 (2) $20 $28 5000 1250 Random Number 0.005 0.969 0.385 0.556 0.965 0.409 0.544 0.200 0.452 0.758 $50 $100,000 (3) Variable Cost per Unit #DIV/0! (4) Random Number 0.853 0.630 0.253 0.225 0.643 0.655 0.458 0.822 0.468 0.453 Summary Statistics Sample Size Mean Profit Standard Deviation Minimum Profit Maximum Profit Count of Losses Probability of Loss Value at risk (at 5%) (5) Demand #DIV/0! (Selling price - Unit VC) Dmd - FC (6) Profit #DIV/0! Bin -60000 -40000 -20000 0 20000 40000 60000 80000 100000 120000 140000 160000 180000