Homework SoursePortaCom manufactures notebook computers and related equipme
PortaCom manufactures notebook computers and related equipment. PortaCom\'s product design group developed a prototype for a new high-quality portable printer. The new printer features an innovative design and has the potential to capture a significant share of the portable printer market. Preliminary marketing and financial analyses provided the following selling price, first-year administrative cost, and first-year advertising cost:
In the simulation model for the PortaCom problem, the preceding values are constants and are referred to as parameters of the model.
The cost of direct labor, the cost of parts, and the first-year demand for the printer are not known with certainty and are considered probabilistic inputs. At this stage of the planning process, PortaCom\'s best estimates of these inputs are $45 per unit for the direct labor cost, $90 per unit for the parts cost, and 15,000 units for the first-year demand. PortaCom would like an analysis of the first-year profit potential for the printer. Because of PortaCom\'s tight cash flow situation, management is particularly concerned about the potential for a loss.
| Selling price | = | $249 per unit |
| Administrative cost | = | $400,000 |
| Advertising cost | = | $600,000 |
Solution
