Probability of making loss from this investment

Assignment Help Operation Management

Reference no: EM132261483

Your group is a decision-making team in your firm and is considering an estimated $10 million expansion project. Estimates of key input factors are as following (all uniformly distributed):

Market size: 100,000 to 350,000 tons

Selling price: $375 to $575

Market growth rate: 0 to 6% per year

Market share: 3% to 17%

Total investment required: $7 million to $10.5 million

Useful life of the new facility: 5 to 15 years

Residual value of the facility: $3.5 million to $5 million

Operating costs: $320 to $550 per ton

Fixed costs: $250,000 to $375,000 per year

Analyze the risks associated with this project. The results of the risk analysis include: estimated net profit/loss, possible minimum profit or maximum loss, possible maximum profit or minimum loss, and probability of making loss from this investment.

Use Excel to create a simulation model and solve this risk analysis problem.

Reference no: EM132261483

Questions Cloud

Organizational impact analysis explains how proposed system : Organizational impact analysis explains how a proposed system will affect:

Quantitative connection in employee engagement and turnover : How could HR professionals show a quantitative connection between employee engagement and turnover?

Performance metrics is good idea for testing purposes : Performance metrics is a good idea for testing purposes, and it can be a helpful reference on where the needed improvements are in a company.

Customer segment analysis-product life cycle forecasting : Customer segment analysis, product life cycle forecasting, and what-if analysis for capacity decisions are capabilities that a(n):

Probability of making loss from this investment : Estimated net profit/loss, possible minimum profit or maximum loss, possible maximum profit or minimum loss, and probability of making loss from this investment

Electronic commerce software must summarize sales-shipments : Electronic commerce software must summarize sales and shipments.

System characteristics that contribute to dynamic complexity : Review the system characteristics that contribute to dynamic complexity: – Change – Trade-offs – History dependency – Tight coupling – Nonlinearity

How does one measure the success of organization : How does one measure the success of an organization? How does one use this information systematically?

User Account

All Pages