In: Statistics and Probability
The management of Brinkley Corporation is interested in using
simulation to estimate the profit per unit...
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 $50 per unit. Probability
distributions for the purchase cost, the labor cost, and the
transportation cost are estimated as follows:
Procurement
Cost ($) |
Probability |
Labor Cost ($) |
Probability |
Transportation
Cost ($) |
Probability |
10 |
0.45 |
20 |
0.2 |
2 |
0.75 |
12 |
0.25 |
22 |
0.25 |
4 |
0.25 |
13 |
0.3 |
25 |
0.35 |
|
|
|
|
27 |
0.2 |
|
|
- Compute profit per unit for the base-case, worst-case, and
best-case.
Profit per unit for the base-case: $___
Profit per unit for the worst-case: $___
Profit per unit for the best-case: $___
- Construct a simulation model to estimate the mean profit per
unit. If required, round your answer to the nearest cent.
Mean profit per unit = $___
- Why is the simulation approach to risk analysis preferable to
generating a variety of what-if scenarios?
- Management believes the project may not be sustainable if the
profit per unit is less than $9. Use simulation to estimate the
probability the profit per unit will be less than $9. If required,
round your answer to one decimal place.
____%