The management of Madeira Manufacturing Company is considering the introduction
ID: 3265835 • Letter: T
Question
The management of Madeira Manufacturing Company is considering the introduction of a new product. The fixed cost to begin the production of the product is $32,000. The variable cost for the product is uniformly distributed between $19 and $26 per unit. The product will sell for $52 per unit. Demand for the product is best described by a normal probability distribution with a mean of 1, 300 units and a standard deviation of 300 units. Develop an Excel worksheet simulation for this problem. Use 500 simulation trials to answer the following questions: a. What is the mean profit for the simulation? Round your answer to the nearest dollar. Mean profit = $ b. What is the probability that the project will result in a loss? Recalculate the numerical value of probability in percent and then round your answer to the nearest whole number. Probability of Loss = c. What is your recommendation concerning the introduction of the product? The input in the box below will not be graded, but may be reviewed and considered by your instructor.Explanation / Answer
See the excel file:
https://drive.google.com/file/d/0B5GF0YjRTNDRRTBEMEkyOFRBYmM/view?usp=sharing
(a) Mean profit= 10242.32
(b) Probability of Loss= 0.168
(c) Since the probability of loss is late, the porcess is running quite well.
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