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
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
Functions and Change: A Modeling Approach to College Algebra (MindTap Course List)
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Author:Bruce Crauder, Benny Evans, Alan Noell
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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 $45 per unit.
| Procurement Cost ($) |
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 |
- Why is the simulation approach to risk analysis preferable to generating a variety of what-if scenarios?
- 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. If required, round your answer to two decimal places.
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