[SOLVED] The management of Brinkley Corporation

Problem 16-01

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

 

 

1. Compute profit per unit for the base-case, worst-case, and best-case.Profit per unit for the base-case: $  fill in the blank 1

   Profit per unit for the worst-case: $  fill in the blank 2

   Profit per unit for the best-case: $  fill in the blank 3

2. Construct a simulation model to estimate the mean profit per unit. If required, round your answer to the nearest cent.Mean profit per unit = $  fill in the blank 4
3. Why is the simulation approach to risk analysis preferable to generating a variety of what-if scenarios?The input in the box below will not be graded, but may be reviewed and considered by your instructor.

4. 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.