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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
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 $45 per unit. Probability distributions for the purchase cost, the labor cost, and the transportation cost are estimated as follows: Procurement Cost ($) Labor Transportation Probability Cost ($) Probability Cost ($) 0.35 3 Probability 10 20 0.2 0.72 11 0.25 23 0.25 5 0.28 13 0.4 24 0.35 26 0.2 a. Compute profit per unit for the base-case, worst-case, and best-case scenarios. Profit per unit for the base-case: $ Profit per unit for the worst-case: $ Profit per unit for the best-case: $ b. Construct a simulation model to estimate the mean profit per unit. If required, round your answer to the nearest cent. Mean profit per unit = $ c. Why is the simulation approach to risk analysis preferable to generating a variety of what-if scenarios
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