The management of Madeira Computing is considering the introduction of a wearable electronic device with the functionality
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Question:
The management of Madeira Computing is considering the introduction of a wearable electronic device with the functionality of a laptop computer and phone. The fixed cost to launch this new product is $300,000. The variable cost for the product is expected to be between $160 and $240, with a most likely value of $200 per unit. The product will sell for $300 per unit. Demand for the product is expected to range from 0 to approximately 20,000 units, with 4,000 units the most likely.
(a) | Develop a what-if spreadsheet model computing profit for this product in the basecase, worst-case, and best-case scenarios. | ||||||
If your answer is negative, use minus sign. | |||||||
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(b) | Model the variable cost as a uniform random variable with a minimum of $160 and a maximum of $240. Model product demand as 1,000 times the value of a gamma random variable with an alpha parameter of 3 and a beta parameter of 2. Construct a simulation model to estimate the average profit and the probability that the project will result in a loss. | ||||
Round your answers to the nearest whole number. | |||||
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Related Book For
Accounting
ISBN: 978-1337899451
27th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
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