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(All answers were generated using 1,000 trials and native Excel functionality.) The management of Brinkley Corporation is interested in using simulation to estimate the profit per unit for a new

(All answers were generated using 1,000 trials and native Excel functionality.)

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 $45 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 0.25 20 0.10 3 0.75
11 0.45 22 0.25 5 0.25
12 0.30 24 0.35    
    25 0.30    
(a) Construct a simulation model to estimate the average profit per unit. What is a 95% confidence interval around this average?
  Round your answers to two decimal places.
  Lower Bound: $
  Upper Bound: $
(b) Management believes that the project may not be sustainable if the profit per unit is less than $5. Use simulation to estimate the probability that the profit per unit will be less than $5. What is a 95% confidence interval around this proportion?
  Round your answers to one decimal of a percentage.
  Lower Bound:  %
  Upper Bound:  %

Apr 14 2021 View more View Less

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