Production Marketing Raw Material Cost (S) 16 18 20 Probability 0.20 0.30 0.35 0

Question

Production Marketing Raw Material Cost (S) 16 18 20 Probability 0.20 0.30 0.35 0.15 Cost (S)ProbabilityCost ($) 0.25 0.45 0.30 10 6 12 Sunseel Industries produces different types of raw materials and it is interested in using simulation to estimate the profit per unit for its new product X. The selling price for the product will be $40 per unit. Probability distributions for the raw material cost, the production cost, and the marketing cost are shown in the table above. Each cost is a "per unit" cost When answering the following question, just enter the number no dollar signs or other text is necessary. Compute profit per unit for the worst case scenario, ab Compute profit per unit for the best case scenario.

Explanation / Answer

1) in case of worst case raw material cost ,production cost and marketing cost will be used..

now we see the expected cost for raw material ,production and marketing and add those expected costs to find out toatal expected coxt...

expected cost for raw material is =16*.2 +18*.3 +20*.35+22*.15=18.9

expected cost for production is =10*.25+11*.30+12*.45=11.05

expected cos for marketing =5*.4+6*.6=5.6

total expected cost for that raw material is 34.35

profit is =4.45

2) in case of best scenario when only marketing cost is used

profit is 40-5.65=34.4

3) incase of base case scenario when raw material cost when production cost and marketing cost include

profit is 40-(5.65+11.05)=23.3

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