Practical Management Science
Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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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 $45 per unit. Probability distributions
for the purchase cost, the labor cost, and the transportation cost are estimated as follows.
Procurement
Labor
Probability
Cost ($)
Probability Transportation Cost (4) Probability
Cost ($)
10
0.25
20
0.10
0.75
11
0.40
22
0.20
0.25
12
0.35
24
0.40
25
0.30
(a) Construct a simulation model to estimate the average profit (in $) per unit and the variance of the profit per unit. (Use at least 1,000 trials. Round your answer to two decimal places.)
average s 0.00
variance
What is a 95% confidence interval (in $) around this average? (Round your answers to two decimal places.)
(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. (use at
least 1,000 trials. Round your answer to three decimal places.)
What is a 95% confidence interval around this proportion? (Round your answers to three decimal places.)
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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 $45 per unit. Probability distributions for the purchase cost, the labor cost, and the transportation cost are estimated as follows. Procurement Labor Probability Cost ($) Probability Transportation Cost (4) Probability Cost ($) 10 0.25 20 0.10 0.75 11 0.40 22 0.20 0.25 12 0.35 24 0.40 25 0.30 (a) Construct a simulation model to estimate the average profit (in $) per unit and the variance of the profit per unit. (Use at least 1,000 trials. Round your answer to two decimal places.) average s 0.00 variance What is a 95% confidence interval (in $) around this average? (Round your answers to two decimal places.) (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. (use at least 1,000 trials. Round your answer to three decimal places.) What is a 95% confidence interval around this proportion? (Round your answers to three decimal places.) to
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