Considering the introduction of new product

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Reference no: EM131181185

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 $36,000. The variable cost for the product is uniformly distributed between $20 and $28 per unit. The product will sell for $56 per unit. Demand for the product is best described by a normal probability distribution with a mean of 1,200 units and a standard deviation of 100 units. Develop an Excel worksheet simulation for this problem. Use 500 simulation trials to answer the following questions:

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

Mean profit = $ _____________

b. 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 ______________= %

Reference no: EM131181185

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