A company wants to release a new product. They are considering the profit in case they release the book. The profit depends on number of sold products, per product price and per product cost. The lower bound, base value and upper bound for each parameter are as wwwww follows: + I Number Sold Per Unit Price Per Unit Cost Lower Bound 500 10 5 Base Value 1500 20 10 Upper Bound 5000 30 15 The company wants a profit of 10000 in order to have it as a viable product. a) Draw a tornado diagram to find out which of the parameters are more critical and needs further analysis. Report these parameters. b) Make a two way sensitivity analysis for number sold and per unit price to find out the joint values for which releasing the product is viable.
A company wants to release a new product. They are considering the profit in case they release the book. The profit depends on number of sold products, per product price and per product cost. The lower bound, base value and upper bound for each parameter are as wwwww follows: + I Number Sold Per Unit Price Per Unit Cost Lower Bound 500 10 5 Base Value 1500 20 10 Upper Bound 5000 30 15 The company wants a profit of 10000 in order to have it as a viable product. a) Draw a tornado diagram to find out which of the parameters are more critical and needs further analysis. Report these parameters. b) Make a two way sensitivity analysis for number sold and per unit price to find out the joint values for which releasing the product is viable.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:A company wants to release a new product. They are considering the profit in case they
release the book. The profit depends on number of sold products, per product price and per
product cost. The lower bound, base value and upper bound for each parameter are as
follows:
AMAN
I
Number Sold
Per Unit Price
Per Unit Cost
Lower Bound Base Value
500
10
5
1500
20
10
Upper Bound
5000
30
15
The company wants a profit of 10000 in order to have it as a viable product.
a) Draw a tornado diagram to find out which of the parameters are more critical and
needs further analysis. Report these parameters.
b) Make a two way sensitivity analysis for number sold and per unit price to find out
the joint values for which releasing the product is viable.
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