Home / Questions / (All answers were generated using 1,000 trials and native Excel functionality.) The manag...
(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: % |
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