Profit Analysis. A consumer electronics firm produces a line of battery recharge

Question

Profit Analysis. A consumer electronics firm produces a line of battery rechargers for cell phones. The following distributions apply: Unit price triangular with a minimum of $30.00, most likely value of $35.00, and a maximum of $38.00. Unit cost uniform with a minimum of $20.00 and a maximum of $23.00. Quantity sold 20,000 – 500 x unit price, plus a random term given by a normal distribution with a mean of 0 and a standard deviation of 5. Fixed costs Normal with a mean of $30,000 and a standard deviation of $5,000. What is the expected profit on average? What is the probability of a loss %? What is the maximum profit? please solve in excelsheet

Explanation / Answer

In the "Slow market" scenario, you expect to sell 500 units at an average selling price of 38 per unit.
    In the "OK market" scenario, you expect to sell 10000 units, but you'll likely realize a lower average selling price of $35 per unit.
    In the "Hot market" scenario, you expect to sell 20,000 units, but this will bring in competitors who will drive down the average selling price to $30.00 per unit.

As a result, you expect to sell 10166.66667
units at an average selling price of $34.33 per unit

Unit Cost would be between 20-23 so the average is 21.5

Net Profit = Sales Volume * (Selling Price - Unit cost) - Fixed costs.

Volume Price Hot Market 20000 30 Min Sales and Cost Data OK market 10000 35 Mostly Sales Volume 10166.66 Slow Market 500 38 Max Selling Price 34.33 Unit Price 21.5 Cost Scenario Min 20 Profit Forecast Max 23 Net Profit 100438.2 Avg 21.5

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