What-if Model. THANKS SO MUCH

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 $169 and $249, with a most likely value of $209 per 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 $169 and a maximum of $249. 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.)

(c)

What is your recommendation regarding whether to launch the product?

While the average profit is fairly high, the probability of a loss is greater than 10%, so Madeira Computing may not want to launch the product if they have low risk tolerance.The average profit is extremely low, and the probability of a loss is greater than 10%, so Madeira Computing should not launch this product. While the probability of a loss is less than 10%, the average profit is extremely low, so it may not be worthwhile for Madeira Computing to launch this product.The average profit is in the negative, so Madeira Computing should not launch this product.The average profit is fairly high, and the probability of a loss is less than 10%, so it appears to be a good idea for Madeira Computing to launch this product.