Business, 22.04.2021 21:20 SugaAndKookie22
The management of Madeira Computing is considering the introduction of a wearable electronic device with the functionality of a laptop computer and phone, The fixed cost to launch this new product is $300,000. The variable cost for the product is expected to be between $160 and $240, with a most likely value of $200 per unit. The product will sell for $300 per unit. Demand estimates for the product vary widely, ranging from 0 to 20,000 units, with 4,000 units the most likely.
A) Develop a what-if spreadsheet model computing profit for this product in the base case, worst-case, and best-case scenarios.
Best-case profit: $
Worst-case profit: $
Base case profit: $
B) Model the variable cost as a uniform random variable with a minimum of $160 and a maximum of $240. Model product demand as 1,000 times the value of a gamma random variable with an alpha parameter of 3 and a beta parameter of 2. Construct a simulation model to estimate the average profit and the probability that the project will result in a loss.
Average profit: $
Probabilty of a loss: %
Answers: 1
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