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In: Statistics and Probability

Problem 12-14 (Algorithmic) The management of Madeira Manufacturing Company is considering the introduction of a new...

Problem 12-14 (Algorithmic) The management of Madeira Manufacturing Company is considering the introduction of a new product. The fixed cost to begin the production of the product is $30,000. The variable cost for the product is uniformly distributed between $16 and $24 per unit. The product will sell for $50 per unit. Demand for the product is best described by a normal probability distribution with a mean of 1,200 units and a standard deviation of 300 units. Develop an Excel worksheet simulation for this problem. Use 500 simulation trials to answer the following questions: What is the mean profit for the simulation? Round your answer to the nearest dollar. Mean profit = $ What is the probability that the project will result in a loss? Recalculate the numerical value of probability in percent and then round your answer to the nearest whole number. Probability of Loss = % What is your recommendation concerning the introduction of the product? The input in the box below will not be graded, but may be reviewed and considered by your instructor.

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