Question: Management is interested in using simulation to estimate the profit per unit of a potential new product. The selling price for the new product will
Management is interested in using simulation to estimate the profit per unit of a potential new product. The selling price for the new product will be $65 per unit and the probability distributions for the costs (purchase, labor, and transportation) are as follows:
| Procurement Cost ($) | Probability | Labor Cost ($) | Probability | Transportation Cost($) | Probability |
| 10 | 0.45 | 20 | 0.10 | 3 | 0.75 |
| 11 | 0.25 | 22 | 0.25 | 5 | 0.25 |
| 12 | 0.30 | 24 | 0.35 | ||
| 24 | 0.30 | ||||
Using the data in the table provided above, calculate/respond to the following questions:
a. Compute the profit per unit for the base case, worst-case, and best-case scenarios?
b. For Procurement Cost setup the random number intervals given the distributions provided above.
c. Simulate the Procurement Cost given the random numbers 0.1467, 0.7913, 0.9013, and 0.6238.
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