The management of Madeira Manufacturing Company is considering the introduction
ID: 3155180 • Letter: T
Question
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 $37,000. The variable cost for the product is uniformly distributed between $19 and $26 per unit. The product will sell for $57 per unit. Demand for the product is best described by a normal probability distribution with a mean of 1,300 units and a standard deviation of 200 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.
Explanation / Answer
https://drive.google.com/file/d/0B2-9M_7loeDvV0l0a1BkMGdIQTg/view?usp=sharing
The excel file is uploaded here with 500 simulations
Total net profit = 7000.3, avg cost = 65812
Profit %
7000.3/65812 *100=
10.6% profit
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