The management of Madeira Computing is considering the introduction of a wearable electronic device with the functionality of a laptop computer and phone. The fixed cost to launch this new product is $300,000. The variable cost for the product is expected to be between $168and $248, with a most likely value of $208per unit. The product will sell for $300 per unit. Demand for the product is expected to range from 0 to approximately 20,000 units, with 4,000 units the most likely.

(a) Develop a what-if spreadsheet model computing profit (in $) for this product in the base-case, worst-case, and best-case scenarios.

base-case $ ?

worst-case $?

best-case $?

(b) Model the variable cost as a uniform random variable with a minimum of $168and a maximum of $248. Model the product demand as 1,000 times the value of a gamma random variable with an alpha parameter of 3 and a beta parameter of 2. Construct a simulation model to estimate the average profit and the probability that the project will result in a loss. (Use at least 1,000 trials.)

What is the average profit (in $)? (Round your answer to the nearest thousand.)

What is the probability the project will result in a loss? (Round your answer to three decimal places.)