Forward with manufacturing the proposed new product

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Reference no: EM132265383

Do a simulation for a new proposed manufactured product using the following details …

Create a simulation to determine if the company should be going forward with manufacturing the proposed new product. Base your recommendation on the simulation’s resulting probability that the company will lose money on this possible venture. Make each trial to include the one year of profit/loss simulated.

Allow Excel to randomly select the market size. The estimated market size is uniformly distributed between 92,000 and 145,000 units annually.

The selling price will be $219 per unit.

The cost of materials/parts is estimated to be uniformly distributed between $90 and $99 per unit.

Allow Excel to randomly select the company’s market share. Market share is uniformly distributed between 6.5 and 8.5 percent of the market size.

Labor cost has been assigned the following probabilities and needs to be randomly selected.

$100 per unit = 22%, $101 = 18%, $102 = 16%, $103 = 23%, and $104 = 21%

The company expects to have an annual overhead fixed cost of $150,000.

Have your simulation include at least 100 trials. Also include a “probability of loss” calculation based on the year’s total profit/loss from each trial. Make a recommendation on whether the company should go forward with manufacturing the new product.

Reference no: EM132265383

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