The management of Brinkley Corporation is interested in using simulation to estimate the profit per unit for a new product. The selling price for the product will be $45 per unit. Probability distributions for the purchase cost, the labor cost, and the transportation cost are estimated as follows:
Procurement Cost ($)
Probability
Labor Cost ($)
Probability
Transportation Cost ($)
Probability
10
0.25
20
0.10
3
0.75
11
0.45
22
0.25
5
0.25
12
0.30
24
0.35
25
0.30
1.21. Compute profit per unit for base-case (most likely), worst-case, and best-case scenarios.
Base Case using most likely costs
Profit = 45 – (11 + 24 + 3) = $7 per unit
Worst Case
Profit = 45 – (12 + 25 + 5) = $3 per unit
Best Case
Profit = 45 – (10+ 20 + 3) = $12 per unit
THIS ONE IS DONE!!
2.22. Construct a simulation model to estimate the mean profit per unit.
Please explain how to do this on excel
3.23. Why is the simulation approach to risk analysis preferable to generating a variety of what-if scenarios?
[write your paragraph here]
4.24. Management believes that the project may not be sustainable if the profit per unit is less than $5. Use simulation to estimate the probability that the profit per unit will be less than $5.
5.
[write your paragraph here]
3.2 Construct a spreadsheet simulation model to simulate 10,000 rolls of a die with the six sides numbered 1, 2, 3, 4, 5 and 6.
6.25. Construct a histogram of the 10,000 observed dice rolls.
7.26. For each roll of two dice, record the sum of the dice. Construct a histogram of the 10,000 observations of the sum of two dice.
8.27. For each roll of three dice, record the sum of the dice. Construct a histogram of the 10,000 observations of the sum of three dice.
9.28. Compare the histograms in parts (a), (b) and (c). What statistical phenomenon does this sequence of charts illustrate? (Hint: see Appendix 14.2)
10.
