Assume Acme Inc is considering introducing a new product su

Assume Acme Inc is considering introducing a new product - super Deluxe Widgets. The Widgets will sell for $229 per unit. It is anticipated that the first year administrative costs will be $10,000 and the first year advertising budget is projected to be $8,000. The direct labor costs are uncertain, but it is believed they can be accurately can be represented by a normal distribution with a mean of $90 and a standard deviation of $30. Experts in the area have subjectively estimated the parts cost can be simulated by the discrete probability distribution listed below. The forecasted demand for the first year may be represented by a uniform distribution with limits of 500 and 700. Obtain summary statistics for 50 simulated trials to answer the four questions listed below. (Turn in the computer printout along with this answer sheet).

Cost per unit        Probability

$60                              .20

$65                              .25

$70                              .30

$75                              .15

$80                              .10

A). What is the mean profit on the 50 simulated trials?

B) What is the standard deviation of the 50 simulated trials?

C). How many simulated trials resulted in a loss?

D). Of the 50 simulated trials, what was the maximum profit?

Solution