Nuts Galore Inc. is analyzing each mix given some uncertain variables. They have researched the uncertainties in the marketplace and found that variations could occur in product costs of nuts due to supply chain issues with suppliers, labor costs due to labor disruptions, and demand could vary from customers too.

To simulate the behavior of uncertain variables, they draw 500 random samples from a probability distribution for each of those variables. Product variable cost/lb of nuts are subject to a uniform distribution ranging between upper and lower limits as given: Regular $1.03245-$1.4875; Deluxe $1.07-$1.6; Holiday $1.1-$1.46.

The adoption of some modern robotics equipment has increased equipment costs, shown in Part 1, by $1/lb on each nut mix, but reduced labor costs, shown in Part 1, by $3/lb on each of the three mixes.

Labor variable cost/lb of nuts are now subject to an exponential distribution ranging between upper and lower limits as given: Regular $0-$18.00; Deluxe $0-$18.50; Holiday $0-$19.00.

Demand changes based on a normal distribution with a given mean and standard deviation of each mix: Regular 10,000 mean, st dev 4000; Deluxe 3,000 mean, 300 st dev; Holiday 5,000 mean, 2000 st dev.

Setup costs are provided for producing each type of mix: Regular $18,000; Deluxe $16,500; Holiday $19,200. See Tables 1-3 below showing these numbers.

RegularProduct Selling PriceVariable Cost/lb Demand $ 10.90 Smallest Value $ 1.0325 10,000 Largest Value $ 1.4875 4000 Setup costAverage Labor cost/lbEquipment cost/lb $ 18,000.00 $ 2.1075 $ 4.1100 Smallest Value 0.00 Largest Value $ 18.00

Table 1 above Regular Nut Mix numbers

DeluxeProduct Selling PriceVariable Cost/lb Demand $ 11.69 Smallest Value $ 1.07 3,000 Largest Value $ 1.60 300 Setup costAverage Labor cost/lbEquipment cost/lb $ 16,500.00 $ 2.4200 $ 4.2000 Smallest Value 0.00 Largest Value $ 18.50

Table 2 above Deluxe Nut Mix numbers

HolidayProduct Selling PriceVariable Cost/lb Demand $ 12.25 Smallest Value $ 1.10 5,000 Largest Value $ 1.46 2000 Setup costAverage Labor cost/lbEquipment cost/lb $ 19,200.00 $ 2.5500 $ 4.3500 Smallest Value 0.00 Largest Value $ 19.00

Table 3 above Holiday Nut Mix numbers

Create a simulation using 500 random samples of the variable data for Nuts Galore, Inc.’s product mix problem.

Explanation of how you calculate profits, min, max, mean, st dev, also mean demand and mean profit and probability of loss on each mix. Include the calculations

Explain how you determined which mix seems to be the most profitable.

If the nut producer is able to avoid labor disruptions by eliminating the uncertainty of this variable, does this improve its profit projections? Explain.

If the nut producer is able to control its suppliers and avoid supply chain disruptions, thereby removing the variability of the product cost, does this improve its profits? Explain

What other insights do you get from this simulation that you would highlight to the nut producer?
 
 
 

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Regular Selling Price $ 10.90 Setup cost $ 18,000.00 Product Variable Cost/lb Smallest Value Largest Value Average Labor cost/lb $ 2.1075 Smallest Value Largest Value $ 0.00 18.00 $ 1.0325 $ 1.4875 Equipment cost/lb $ 4.1100 Demand 10,000 4000 Regular Selling Price $ 10.90 Setup cost $ 18,000.00 Product Variable Cost/lb Smallest Value Largest Value Average Labor cost/lb $ 2.1075 Smallest Value Largest Value $ 0.00 18.00 $ 1.0325 $ 1.4875 Equipment cost/lb $ 4.1100 Demand 10,000 4000