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(Using Excel) The management of Brinkley Corporation is interested in using simulation to estimate the profit per unit for a new product. The selling price
(Using Excel) 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.
for the purchase cost, the labor cost, and the transportation cost are estimated as follows. \begin{tabular}{|c|c|c|c|c|c|} \hline \begin{tabular}{c} Procurement \\ Cost (\$) \end{tabular} & Probability & \begin{tabular}{c} Labor \\ Cost (\$) \end{tabular} & Probability & Transportation Cost (\$) & Probability \\ \hline 10 & 0.25 & 20 & 0.15 & 3 & 0.75 \\ \hline 11 & 0.40 & 22 & 0.20 & 5 & 0.25 \\ \hline 12 & 0.35 & 24 & 0.35 & & \\ \hline & & 25 & 0.30 & & \\ \hline \end{tabular} (a) Compute profit (in \$) per unit for the base-case scenario. $ per unit (b) Compute profit (in \$) per unit for the worst-case scenario. $ per unit (c) Compute profit (in \$) per unit for the best-case scenario. $ per unit values you enter to make later calculations.) average variance What is a 95% confidence interval (in \$) around this average? (Round your answers to two decimal places.) $ to $ (e) Why is the simulation approach to risk analysis preferable to generating a variety of what-if scenarios? A simulation model is significantly easier to develop and verify than a set of what-if scenarios. A simulation model provides a distribution of profit per unit values allowing the analyst to compute the likelihood of profit per unit to be in a specified range. A simulation model provides the maximum and minimum possible profit per unit values which allows the analyst to determine how severe potential losses may be. A simulation model does not require the use of as many variables as a what-if scenario does and does not rely on as many assumptions. less than $5. (Use at least 1,000 trials. Round your answer to three decimal places. Use the value you enter to make later calculations.) What is a 95% confidence interval around this proportion? (Round your answers to three decimal places.) toStep by Step Solution
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