Question

Problem 12-01 (Algorithmic)

The management of Brinkley Corporation is interested in using simulation to estimate the profit per unit for a new product. The selling price for the product will be $ 45 per unit. Probability distributions for the purchase cost, the labor cost, and the transportation cost are) estimated as follows:

a. Compute profit per unit for the base-case, worst-case, and best-case scenarios.

Profit per unit for the base-case: $

Profit per unit for the worst-case: $

Profit per unit for the best-case: $

b. Construct a simulation model to estimate the mean profit per unit. If required, round your answer to the nearest cent.

Mean profit per unit = $

c. Why is the simulation approach to risk analysis preferable to generating a variety of what if scenarios?

The input in the box below will not be graded, but may be reviewed and considered by your instructor.

Answer 1