Can you show the steps on howand to solve the following problem using Analytic S

Question

Can you show the steps on howand to solve the following problem using Analytic Solver Platform?

For the Outsourcing Decision Model, suppose that the demand volume is lognormally distributed with a mean of 1,500 and a standard deviation of 500. What is the distribution of the cost differences between manufacturing and in-house purchasing? What decision would you recommend? Define both the cost difference and decision as output cells. Because output cells in Analytic Solver Platform must be numeric, replace the formula in cell B20 with =IF(B19<=0,1,0); that is 1 represents manufacturing and 0 represents outsourcing.  

Outsourcing Decision Model

Data

Manufactured in-house

Fixed costs = $50,000 Unit Variable cost = $125 Purchased from supplier Unit Cost = $175

Demand Volume = $1,500  

Total Manufacturing Costs = $237,500 (Fixed Costs + Unit Variable Costs * Demand Volume) ($50,000+125*$1,500)

Total Purchasing Costs = $262,500 (Demand Volume * Unit costs) = ($1,500 x $175)

Cost difference (Manufacture - Purchase) = -$25,000 (Total Manufacturing Costs - Total Purchasing Costs)

Best Decision = Manufacture

Explanation / Answer

We recommend the manufacturing decision as it saves a cost of $25,000.

Outsourcing Decision Model Data Manufactured in-house Fixed cost $50,000 Unit variable cost $125 Purchased from supplier Unit cost $175 Production volume 1500 Model Total manufacturing cost $237,500 Total purchased cost $262,500 Cost difference (Manufacture - Purchase) $0 Best Decision Manufacture

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