C_ The management at XYZ Corporation needs to know the profit per unit sold of a
new product. The new product is priced to sell for $45 per unit. The costs incurred in
bringing this new product to market are for production, labor, and transportation
(shipping). Empirical probability distributions for the purchase cost, labor cost, and
transportation cost (all on a per unit basis) are as follows:
Note: Profit = Selling Price – Purchase Cost – Labor Cost – Transportation Cost
NOTE: In parts 25 and 28 you MUST provide a copy of your Excel
simulation and of your Excel calculations for problem C to receive credit for
this problem. You are also reminded to submit all of your computer files for
this problem with your completed exam to the “Final Exam” link on Bb.
Failure to provide any of these deliverables will result in this problem NOT
being scored.
24. a. In new lines entered below this part, state the calculated profit per unit
for the base-case using the most likely costs.
b. In new lines entered below this part, state the calculated profit per unit
for the best case.
c. In new lines entered below this part, state the calculated profit per unit
for the worst case.
25. Simulate the profit per unit by performing 20 random trials for each individual
cost.
In a space created below this part, you must present HERE a copy of your
Excel simulation for problem C.
· AND submit all of your computer files for this problem with your
completed exam to the “Final Exam” link on Bb. Include in the filenames
“Prob C.”
26. On the basis of your simulation in part 25,
a. In new lines entered below this part, state to the nearest penny the
mean profit per unit.
b. In new lines entered below this part, state to the nearest penny the profit
variability per unit as measured by the standard deviation.
c. In new lines entered below this part, state to the nearest penny the
lower limit of the 95% confidence interval for mean profit.
d. In new lines entered below this part, state to the nearest penny the upper
limit of the 95% confidence interval for mean profit.
27. Management believes that this product will not be sufficiently profitable to
warrant the investment in bringing it to market if the profit is less than $5 per unit.
On the basis of your simulation, is the product profitable enough to satisfy
management’s criterion? Explain.
28. In a space created below this part, you must present HERE a copy of your
Excel spreadsheet for problem C.
· AND submit all of your computer files for this problem with your
completed exam