The management of Brinkley Corporation is interested in using simulation to estimate the profit per unit for a new product. The selling price for the product will be $45 per unit. Probability distributions for the purchase cost, the labor cost, and the transportation cost are estimated as follow:

Procurement Cost Probability Labor Cost ($) Probability Transportation Cost ($) Probability

10 .25 20 .10 3 .75

11 .45 22 .25 5 .25

12 .30 24 .35

25 .30

a. compute profit per unit for the base case, worst case, and best case

b. construct a simulation model to estimate the mean profit per unit

c. why is the simulation approach to risk analysis preferable to generating a variety of what-if scenarios?

d. management believes the project may not be sustainable if the profit per unit is less than $5. Use simulation to estimate the probability the profit per unit will be less than $5