Problem 14-1 (All answers generated on the Analytic Solver Platform using 10,000

Question

Problem 14-1

(All answers generated on the Analytic Solver Platform using 10,000 trials and random seed 1994.)

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 0.35 20 0.2 3 0.72 11 0.4 23 0.25 5 0.28 13 0.25 24 0.35 26 0.2

Explanation / Answer

the answer of the above question is as below lets start with the (a) part

(a)

the selling price is mentioned as 45$

Profit = Selling Price(SP) - procurement Cost(PC)- Labor Cost (LC)- Transportation Cost(TC)
lets start from the best case first
Profit = 45 - 11 - 24 - 3 = $7/unit
Worst Case
Profit = 45 - 12 - 25 - 5 = $3/unit
Best Case
Profit = 45 - 10 - 20 - 3 = $12/unit

(d)Simulation unit will provide the benefit of the arrangement animation. collecting a percentage
simulation trials, giving less than $ 4 profit per unit to provide an estimate the probability
the unit will have an unacceptably low profit.

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