A marketing analyst is asked to build a simulation for a new product launch. The new...

 

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A marketing analyst is asked to build a simulation for a new product launch. The new product's net profit= sales volume * (sales price - unit cost) - fixed costs The analyst's market research has produced the table below, showing the estimates of the distribution for volume and price. Table 1: Forecasted Sales Volume and Price Scenario Steady Market Growth Market Sales Volume (units) Sales Price ($/unit) Probability 60,000 $12.00 60% 100,000 $9.00 40% The production team has estimated the unit cost to be $7.50, with some uncertainty. The analyst decides to model the unit cost as normally distributed with a mean of $6.50 and a std dev of $.25. Fixed costs are known to be $120,000. Build a simulation model for this new product's profit to answer the following questions. (5,000 trials is sufficient for the accuracy required). What is the Expected Net Profit of the simulation model? (Round to the nearest whole $) [ENP] What percent of the time is Net Profit less than 0? (Round to the nearest 0.1%) [NetLoss] The VP of Sales would like to be able to report to upper management that the probability of a net loss (net profit < 0) for the new product is less than 1%. He asks the analyst to determine what value for sales volume in the Growth Market scenario would produce this result. What sales volume value in the Growth Market results Net Profit <0 less than 1% of the time? (Round to the nearest $1,000) [GrowthVol] A marketing analyst is asked to build a simulation for a new product launch. The new product's net profit= sales volume * (sales price - unit cost) - fixed costs The analyst's market research has produced the table below, showing the estimates of the distribution for volume and price. Table 1: Forecasted Sales Volume and Price Scenario Steady Market Growth Market Sales Volume (units) Sales Price ($/unit) Probability 60,000 $12.00 60% 100,000 $9.00 40% The production team has estimated the unit cost to be $7.50, with some uncertainty. The analyst decides to model the unit cost as normally distributed with a mean of $6.50 and a std dev of $.25. Fixed costs are known to be $120,000. Build a simulation model for this new product's profit to answer the following questions. (5,000 trials is sufficient for the accuracy required). What is the Expected Net Profit of the simulation model? (Round to the nearest whole $) [ENP] What percent of the time is Net Profit less than 0? (Round to the nearest 0.1%) [NetLoss] The VP of Sales would like to be able to report to upper management that the probability of a net loss (net profit < 0) for the new product is less than 1%. He asks the analyst to determine what value for sales volume in the Growth Market scenario would produce this result. What sales volume value in the Growth Market results Net Profit <0 less than 1% of the time? (Round to the nearest $1,000) [GrowthVol]

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To build a simulation model for the new products profit we will use the following inputs 1 Sales Vol... View the full answer