Mathematics, 26.06.2020 22:01 TheMixingToad

The management of Acme Manufacturing Company is considering the introduction of a new product. The fixed cost to begin the production of the product is $100,000. The variable cost for the product is uniformly distributed between $20 and $28 per unit. Demand for the product is best described by a normal probability distribution with a mean of 5000 units and a standard deviation of 1250 units. (a) Perform a simulation of 500 trials. (b) What are the mean variable cost/unit and mean demand from the simulation? (c) What are the mean and standard deviation of the profit from the simulation? (d) Create a histogram showing the profit distribution. (e) What is the probability the product will result in a loss? (f) What is the value at risk (at 5%)? (g) Suppose Acme wants to introduce the product only if probability of loss is no more than 10%. Based on this, what is your recommendation?

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The management of Acme Manufacturing Company is considering the introduction of a new product. The f...

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