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The management of Brinkley Corporation is interested in using simulation to estimate the profit per...

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Accounting

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

(a) Construct a simulation model to estimate the average profit per unit. What is a 95% confidence interval around this average? Round your answers to two decimal places.

Lower Bound: $

Upper Bound: $

(b) 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. What is a 95% confidence interval around this proportion? Round your answers to one decimal of a percentage.

Lower Bound: %

Upper Bound: %

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