PortaCom manufactures notebook computers and related equipment. PortaCom\'s prod
ID: 464595 • Letter: P
Question
PortaCom manufactures notebook computers and related equipment. PortaCom's product design group developed a prototype for a new high-quality portable printer. The new printer features an innovative design and has the potential to capture a significant share of the portable printer market. Preliminary marketing and financial analyses provided the following selling price, first-year administrative cost, and first-year advertising cost:
In the simulation model for the PortaCom problem, the preceding values are constants and are referred to as parameters of the model.
The cost of direct labor, the cost of parts, and the first-year demand for the printer are not known with certainty and are considered probabilistic inputs. At this stage of the planning process, PortaCom’s best estimates of these inputs are $45 per unit for the direct labor cost, $90 per unit for the parts cost, and 14000 units for the first-year demand. The standard deviation of 3500 units describes the variability in the first-year demand. PortaCom would like an analysis of the first-year profit potential for the printer. Because of PortaCom’s tight cash flow situation, management is particularly concerned about the potential for a loss.
Following is the table of random number intervals for generating values of direct labor cost per unit.
The parts cost depends upon the general economy, the overall demand for parts, and the pricing policy of PortaCom’s parts suppliers. PortaCom believes that the parts cost will range from $70 to $100 per unit. Costs per unit between $70 and $100 are equally likely.
Use the random numbers 0.3567, 0.9121, 0.0417, 0.5541, and 0.7426 to generate five simulated values for the PortaCom direct labor cost per unit. If required, round your answers to the nearest dollar.
Use the random numbers 0.5979, 0.313, 0.2365, 0.4539, and 0.8846 to generate five simulated values for the PortaCom parts cost. If required, round your answers to the nearest cent.
Use the random numbers 0.7778, 0.1211, 0.529, 0.6826, and 0.298 and the table for the cumulative standard normal distribution in Appendix B to generate five simulated values for the PortaCom first-year demand. If required, round your answers to the nearest unit.
(please fill in all question marks and make it easy to read)
Selling price = $249 per unit Administrative cost = $400,000 Advertising cost = $600,000Explanation / Answer
Random Number Direct Labor Cost 0.3567 $ 45 0.9121 $ 47 0.0417 $ 43 0.5541 $ 45 0.7426 $ 45 Random Number Parts cost 0.5979 91.958 0.313 86.26 0.2365 84.73 0.4539 89.078 0.8846 97.692 Random Number Demand 0.7778 18300 0.1211 8220 0.529 7311 0.6826 16561 0.298 6271