1 3 RANDOM (UNCERTAIN) INPUTS: 4 5 6 7 8 9 10 MODEL: Profit = Demand*(Selling Price Per Unit - Variable Cost per unit) - Fixed Costs 12 13 14 15 16 17 18 19 20 21 New Product Simulation Demand -- ww Normally distributed with mean 2000 units and st dev 300 units Selling price/Revenue per unit Discrete Uniform between $150 and $200 (whole Dollars) Variable Costs Per Unit - Continuous uniform between $50-$80 per unit Fixed Costs - Normally distributed with mean $130,000, st dev $20,000 STEP 1 Stage 1 Model - Use Average (Mean/Expected) Numbers Avg AvgSelling Avg Variable Avg Fixed Demand Price Per Costs Per 2000 $ Costs Avg Profits 65 $ 130,000 $ 132,240 Place expected values here and then determine profit equation 175 $ STEP 2 (Average/Mean/Expected value= 2000) (Average/Mean/Expected value= $175) (Average/Mean/Expected value= $65) (Average/Mean/Expected value= $130,000) Stage 2 Model - Random Numbers Selling Price Variable Costs Demand Per Unit Per Unit Fixed Costs Profits 2614 $ 199 $ 50.47 $ 141,013 $ 143,87