Recommendation concerning the introduction of the product

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Reference no: EM131181326

The management of Madeira Manufacturing Company is considering the introduction of a new product. The fixed cost to begin the production of the product is $35,000. The variable cost for the product is uniformly distributed between $17 and $25 per unit. The product will sell for $51 per unit. Demand for the product is best described by a normal probability distribution with a mean of 1,400 units and a standard deviation of 400 units. Develop an Excel worksheet simulation for this problem. Use 500 simulation trials to answer the following questions:

What is the mean profit for the simulation? Round your answer to the nearest dollar.

Mean profit = $

What is the probability that the project will result in a loss? Recalculate the numerical value of probability in percent and then round your answer to the nearest whole number.

Probability of Loss = %

What is your recommendation concerning the introduction of the product?

The input in the box below will not be graded, but may be reviewed and considered by your instructor.

Reference no: EM131181326

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