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Problem 12-14 (Algorithmic) The management of Madeira Manufacturing Company is considering the introduction of a new product....

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Basic Math

Problem 12-14 (Algorithmic)

The management of Madeira Manufacturing Company is consideringthe introduction of a new product. The fixed cost to begin theproduction of the product is $36,000. The variable cost for theproduct is uniformly distributed between $20 and $28 per unit. Theproduct will sell for $56 per unit. Demand for the product is bestdescribed by a normal probability distribution with a mean of 1,200units and a standard deviation of 100 units. Develop an Excelworksheet simulation for this problem. Use 500 simulation trials toanswer the following questions:

  1. What is the mean profit for the simulation? Round your answerto the nearest dollar.

    Mean profit = $ ___
  2. What is the probability that the project will result in a loss?Recalculate the numerical value of probability in percent and thenround your answer to the nearest whole number.

    Probability of Loss =____ %

Answer & Explanation Solved by verified expert
3.6 Ratings (624 Votes)
To simulate the variable cost from uniform distribution we use20 2820RANDTo    See Answer
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