Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Salemach Corporation is a start-up company that manufactures simple machines. It is interested in analyzing the profit from a new machine. It estimates that the

image text in transcribed
Salemach Corporation is a start-up company that manufactures simple machines. It is interested in analyzing the profit from a new machine. It estimates that the selling price will be $25 per unit and the setup and advertising costs will total $320. The company expects that the variable cost per unit can be represented by a continuous uniform distribution between $5 and $8. They expect demand is normally distributed with a mean of 1,000 units and a standard deviation of 50 units. Implement a Monte Carlo simulation model in an Excel spreadsheet. Repeat the simulation 1000 times. From the simulation results, estimate Salemach Corporation's expected mean profit. Hint: Recall the steps for implementing simulations in Excel. Step 1) Generate a spreadsheet that solves for the value of interest for a given set of fixed inputs. Step 2) Replace the fixed inputs with the values randomly generated from the appropriate distribution. Step 3) Use a data table to have Excel repeat the simulation n times. Step 4) Summarize the simulation results using appropriate statistical measures. What is the estimated mean profit? Round to the nearest dollar. Your Answer: o Salemach Corporation is a start-up company that manufactures simple machines. It is interested in analyzing the profit from a new machine. It estimates that the selling price will be $25 per unit and the setup and advertising costs will total $320. The company expects that the variable cost per unit can be represented by a continuous uniform distribution between $5 and $8. They expect demand is normally distributed with a mean of 1,000 units and a standard deviation of 50 units. Implement a Monte Carlo simulation model in an Excel spreadsheet. Repeat the simulation 1000 times. From the simulation results, estimate Salemach Corporation's expected mean profit. Hint: Recall the steps for implementing simulations in Excel. Step 1) Generate a spreadsheet that solves for the value of interest for a given set of fixed inputs. Step 2) Replace the fixed inputs with the values randomly generated from the appropriate distribution. Step 3) Use a data table to have Excel repeat the simulation n times. Step 4) Summarize the simulation results using appropriate statistical measures. What is the estimated mean profit? Round to the nearest dollar. Your Answer: o

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Global Business Today

Authors: Charles Hill

7th Edition

0078137217, 9780078137211

More Books

Students also viewed these Finance questions