If we have the probability corresponding to some events then we can use the Monte-Carlo simulation in the following manner. So make the things more clear I am using the given data of meterials.
We have given,
Materials:• The probability is .18 that the cost will be $33.• The probability is .23 that the cost will be $35.• The probability is .32 that the cost will be $38.• The probability is .27 that the cost will be $39.
a) Now we can see the probabilities for the events are different. Now consider a random number (integer) in between 1 to 100. So the probability that any number will be selected within these numbers is 1/100 =0.01. Suppose X is the random number. So clearly X~ Uniform(0,100)
b) Determine the selling price per unit that should be established for this product using your simulation results and assuming that the company wants to realize an average markup of $20 on each unit sold.