Considering the introduction of new product

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Develop a worksheet simulation for the following problem. 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 $30,000. The variable cost for the product is uniformly distributed between $16 and $24 per unit. Demand for the product is best described by a normal probability distribution with a mean of 1200 units and a standard deviation of 300 units. Use 500 simulation trials to answer the following questions. (a) What is the mean profit for the simulation? (b) Create a histogram showing the profit distribution. (c) What is the probability the project will result in a loss? (d) What is the value at risk (at 5%)? (e) What is your recommendation concerning the introduction of the product?

Reference no: EM131128485

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