Question

(All answers were generated using 1,000 trials and native Excel functionality.)

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 ($)	Probability	Labor Cost ($)	Probability	Transportation Cost ($)	Probability
10	0.25	20	0.10	3	0.75
11	0.45	22	0.25	5	0.25
12	0.30	24	0.35
		25	0.30

(a)	Construct a simulation model to estimate the average profit per unit. What is a 95% confidence interval around this average?
	Round your answers to two decimal places.
	Lower Bound: $
	Upper Bound: $

(b)	Management believes that the project may not be sustainable if the profit per unit is less than $5. Use simulation to estimate the probability that the profit per unit will be less than $5. What is a 95% confidence interval around this proportion?
	Round your answers to one decimal of a percentage.
	Lower Bound:  %
	Upper Bound:  %

Answer 1