Problem 12-14 (Algorithmic) The management of Madeira Manufacturing Company is c

Question

Problem 12-14 (Algorithmic)

The management of Madeira Manufacturing Company is considering the introduction of a new product. The fixed cost to begin the production of the product is $34,000. The variable cost for the product is uniformly distributed between $18 and $25 per unit. The product will sell for $54 per unit. Demand for the product is best described by a normal probability distribution with a mean of 1,200 units and a standard deviation of 200 units. Develop an Excel worksheet simulation for this problem. Use 500 simulation trials to answer the following questions:

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RAND FOR VARIALE COST FIXED COST DEMAND COST SELLING PRICE PROFIT LOSS PROBABILITY CALCULATION 20 34000 1151 57244.81426 62137 4892 0 19 34001 1389 59895.49665 75002 15107 0 21 34002 1052 55864.18855 56822 958 0 23 34003 1055 57792.37486 56987 -806 1 19 34004 1054 53720.43861 56935 3214 0 19 34005 1168 56488.04839 63058 6570 0 19 34006 1285 58943.44409 69415 10471 0 21 34007 1115 57388.93805 60226 2837 0 24 34008 990 58128.00527 53465 -4663 1 25 34009 1079 60913.24774 58269 -2644 1 21 34010 1092 56565.77375 58978 2413 0 18 34011 935 50929.38238 50474 -456 1 20 34012 1017 53996.57059 54925 928 0 25 34013 1592 73207.05671 85990 12783 0 24 34014 1048 59239.44573 56603 -2637 1 20 34015 1121 56543.25018 60510 3967 0 21 34016 1417 63482.13331 76501 13019 0 18 34017 1133 54525.85193 61199 6673 0 21 34018 1304 61176.56487 70432 9255

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REPLICATION 1 0.272 2 0.248 3 0.25 4 0.252 5 0.24 6 0.258 7 0.248 8 0.234 9 0.018 10 0.26 PROBABILITY OF LOSS = 0.228

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