Build a simulation model, replicate the model, organize results in a table, and provide conclusions (answers).

The managers of Pizza Palace want a financial analysis focused on total profit for the next 3 years. Use the following data and information the managers have gathered. Sales volume in the first year is estimated to be 100,000 units and is projected to grow each of the following years at a rate that is normally distributed with a mean of 7% and a stdev of 4%. The selling price in year 1 will be $10 (average over the total units sold) and the price increase in each of the following years is estimated to be normally distributed with a mean of $0.50 and a stdev of $0.05. For year one, per-unit variable cost is $3 and annual fixed costs are $200,000 . Per-unit variable costs are expected to change each of the following years by an amount normally distributed with a mean of 5% per year and stdev of 2%. Fixed costs are expected to increase each following year estimated as normally distributed with a mean of 10% per year and stdev of 3%.

The manager also wants you to estimate 1) the likelihood that the 3-year profit will be over $1,800,000, (2) that it will be over $2,000,000, and (3) the risk that the profit will not show an increase over the three years, i.e. the 2nd and 3rd year profits will, on average, be no more than the 1st year. Since the 1st year profit is estimated at $500,000, this is the same as the probability that 3-yr profit is <= $1,500,000.

Use 1000 trials & after obtaining the results you will use, be sure to freeze the 1000 values of the objective measures.