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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 $45 per unit. Probability distributions for the purchase cost, the labor cost, and the estimated as follows: Procurement Cost($) 10 11 12 Probability 0.35 0.25 0.45 0.30 Base Case using most likely costs Worst Case Best Case Labor Cost ($) 20 22 24 25 Probability 0.10 0.25 0.35 0.30 Transportation Cost ($) (a) Compute profit per unit for the base-case, worst-case, and best-case scenarios. Profit= $7 Profit = $3 Profit $12 3 ✔/unit ✔ /unit ✔/unit 5 Probability 0.75 0.25 (b) Construct a simulation model to estimate the mean profit per unit. (Use at least 1,000 trials.) $6.95✔ (c) Why is the simulation approach to risk analysis preferable to generating a variety of what-if scenarios? Simulation will provide a distribution ✓of the profit per unit values which can then be used to find the probability of an unacceptably low profit. (d) Management believes the project may not be sustainable if the profit per unit is less than $5. Use simulation to estimate the probability the profit per unit will be less than $5. (Round your answer to three decimal places.) X

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 $45 per unit. Probability distributions for the purchase cost, the labor cost, and the estimated as follows: Procurement Cost($) 10 11 12 Probability 0.35 0.25 0.45 0.30 Base Case using most likely costs Worst Case Best Case Labor Cost ($) 20 22 24 25 Probability 0.10 0.25 0.35 0.30 Transportation Cost ($) (a) Compute profit per unit for the base-case, worst-case, and best-case scenarios. Profit= $7 Profit = $3 Profit $12 3 ✔/unit ✔ /unit ✔/unit 5 Probability 0.75 0.25 (b) Construct a simulation model to estimate the mean profit per unit. (Use at least 1,000 trials.) $6.95✔ (c) Why is the simulation approach to risk analysis preferable to generating a variety of what-if scenarios? Simulation will provide a distribution ✓of the profit per unit values which can then be used to find the probability of an unacceptably low profit. (d) Management believes the project may not be sustainable if the profit per unit is less than $5. Use simulation to estimate the probability the profit per unit will be less than $5. (Round your answer to three decimal places.) X

Calculus For The Life Sciences
Calculus For The Life Sciences
2nd Edition
ISBN:9780321964038
Author:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.
Publisher:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.
Chapter13: Probability And Calculus
Section13.CR: Chapter 13 Review
Problem 9CR
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please, i do not know why the last part of the question is incorrect. please give a clear answer

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 $45 per unit. Probability distributions for the purchase cost, the labor cost, and the transportation cost are estimated as follows: Procurement Cost($) 10 11 12 0.35 Probability 0.25 0.45 0.30 Labor Cost ($) 20 22 24 25 Probability 0.10 0.25 0.35 0.30 Transportation Cost ($) 3 (a) Compute profit per unit for the base-case, worst-case, and best-case scenarios. Base Case using most likely costs Profit = $7 Worst Case Profit= $3 Best Case Profit $ 12 /unit /unit /unit 5 Probability 0.75 0.25 (b) Construct a simulation model to estimate the mean profit per unit. (Use at least 1,000 trials.) $6.95 (c) Why is the simulation approach to risk analysis preferable to generating a variety of what-if scenarios? Simulation will provide a distribution of the profit per unit values which can then be used to find the probability of an unacceptably low profit. (d) Management believes the project may not be sustainable if the profit per unit is less than $5. Use simulation to estimate the probability the profit per unit will be less than $5. (Round your answer to three decimal places.) X
Transcribed Image Text: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 $45 per unit. Probability distributions for the purchase cost, the labor cost, and the transportation cost are estimated as follows: Procurement Cost($) 10 11 12 0.35 Probability 0.25 0.45 0.30 Labor Cost ($) 20 22 24 25 Probability 0.10 0.25 0.35 0.30 Transportation Cost ($) 3 (a) Compute profit per unit for the base-case, worst-case, and best-case scenarios. Base Case using most likely costs Profit = $7 Worst Case Profit= $3 Best Case Profit $ 12 /unit /unit /unit 5 Probability 0.75 0.25 (b) Construct a simulation model to estimate the mean profit per unit. (Use at least 1,000 trials.) $6.95 (c) Why is the simulation approach to risk analysis preferable to generating a variety of what-if scenarios? Simulation will provide a distribution of the profit per unit values which can then be used to find the probability of an unacceptably low profit. (d) Management believes the project may not be sustainable if the profit per unit is less than $5. Use simulation to estimate the probability the profit per unit will be less than $5. (Round your answer to three decimal places.) X
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