Suppose you are the marketing manager of a firm, and you plan to introduce a new product to the market. You have to estimate the first year net profit, which depends on several variables • Sales volume (in units) • Price per unit • Unit cost • Fixed costs Your net profit is net profit = sales volume × (price per unit-unit cost) - fixed cost The fixed cost is $120, 000, but other factors have some uncertainty. Based on your market research, there are equal chance that the market will be slow, ok, or hot.
Suppose you are the marketing manager of a firm, and you plan to introduce a new product to the market. You have to estimate the first year net profit, which depends on several variables • Sales volume (in units) • Price per unit • Unit cost • Fixed costs Your net profit is net profit = sales volume × (price per unit-unit cost) - fixed cost The fixed cost is $120, 000, but other factors have some uncertainty. Based on your market research, there are equal chance that the market will be slow, ok, or hot.
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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![Suppose you are the marketing manager of a firm, and you plan to introduce a new product to
the market. You have to estimate the first year net profit, which depends on several variables
• Sales volume (in units)
• Price per unit
• Unit cost
. Fixed costs
Your net profit is
net profit = sales volume x (price per unit-unit cost) - fixed cost
The fixed cost is $120, 000, but other factors have some uncertainty. Based on your market research,
there are equal chance that the market will be slow, ok, or hot.
• Slow market the sales volume follows Poisson distribution with mean 50,000 units product, and
the average price per unit is $11.00
●
Ok market the sales volume follows Poisson distribution with mean 75,000 units product, the
average price per unit is $10.00
Hot market: the sales volume follows Poisson distribution with mean 100,000 units product, but
the competition is severe so you expect the average price per unit is just $8.00
No matter what the market type is, your average unit cost follows a normal distribution N(6.5, 1²).
Note that the unit cost is fixed for entire year, same for all units being sold. (Aka, you only need to
sample one unit cost per Monte Carlo simulation).
• Please run Monte Carlo simulations by Excel to sample possible net profit for the next year.
Report the average net profit and draw a histogram of the net profits in the document of your
solution. Also, please export the excel file to pdf file and submit your pdf file for the simulation.
[Hint: Basically you need to generate three types of random variables: 1. sample one from the three
possible markets, use function =RANDBETWEEN(1,3) to generate a random index from 1 to 3.
2. Draw sales volume from the Poisson distribution. 3. Draw average unit cost from the normal
distribution.]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F45fc6267-c8a8-43c9-a2e8-91a192f4395c%2Fdc9d706f-cedb-4f7d-9b68-6498720fc502%2Fhr7ppdp_processed.png&w=3840&q=75)
Transcribed Image Text:Suppose you are the marketing manager of a firm, and you plan to introduce a new product to
the market. You have to estimate the first year net profit, which depends on several variables
• Sales volume (in units)
• Price per unit
• Unit cost
. Fixed costs
Your net profit is
net profit = sales volume x (price per unit-unit cost) - fixed cost
The fixed cost is $120, 000, but other factors have some uncertainty. Based on your market research,
there are equal chance that the market will be slow, ok, or hot.
• Slow market the sales volume follows Poisson distribution with mean 50,000 units product, and
the average price per unit is $11.00
●
Ok market the sales volume follows Poisson distribution with mean 75,000 units product, the
average price per unit is $10.00
Hot market: the sales volume follows Poisson distribution with mean 100,000 units product, but
the competition is severe so you expect the average price per unit is just $8.00
No matter what the market type is, your average unit cost follows a normal distribution N(6.5, 1²).
Note that the unit cost is fixed for entire year, same for all units being sold. (Aka, you only need to
sample one unit cost per Monte Carlo simulation).
• Please run Monte Carlo simulations by Excel to sample possible net profit for the next year.
Report the average net profit and draw a histogram of the net profits in the document of your
solution. Also, please export the excel file to pdf file and submit your pdf file for the simulation.
[Hint: Basically you need to generate three types of random variables: 1. sample one from the three
possible markets, use function =RANDBETWEEN(1,3) to generate a random index from 1 to 3.
2. Draw sales volume from the Poisson distribution. 3. Draw average unit cost from the normal
distribution.]
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