(All answers were generated using 1,000 trials and native Excel functionality.)The management of Madeira Computing is considering the introduction of a wearable electronic device with the functionality of a laptopcomputer and phone. The fixed cost to launch this new product is $300,000. The variable cost for the product is expected to be between$128 and $192, with a most likely value of $160 per unit. The product will sell for $240 per unit. Demand for the product is expected torange from 0 to approximately 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.If your answer is negative, use minus sign.Best-case profitWorst-case profitBase-case profit(b) Model the variable cost as a uniform random variable with a minimum of $128 and a maximum of $192. Model the product demand as 1,000times the value of a gamma random variable with an alpha parameter of 3 and a beta parameter of 2. Construct a simulation model to estimatethe average profit and the probability that the project will result in a loss.Round your answers to the nearest whole number.Average ProfitProbability of a Loss(c) The average profit is fairly highComputing may notand the probability of a loss is greaterwant to launch the product if they have low risk tolerance.than 20%. Thus, Madeira (All answers were generated using 1,000 trials and native Excel functionality.)Galaxy Co. sells virtual reality (VR) goggles, particularly targeting customers who like to play video games. Galaxy procures each pair ofgoggles for $150 from its supplier and sells each pair of goggles for $300. Monthly demand for the VR goggles is a normal randomvariable with a mean of 120 units and a standard deviation of 30 units. At the beginning of each month, Galaxy orders enough gogglesfrom its supplier to bring the inventory level up to 100 goggles. If the monthly demand is less than 100, Galaxy pays $20 per pair ofgoggles that remains in inventory at the end of the month. If the monthly demand exceeds 100, Galaxy sells only the 100 pairs of gogglein stock. Galaxy assigns a shortage cost of $40 for each unit of demand that is unsatisfied to represent a loss-of-goodwill among itscustomers. Management would like to use a simulation model to analyze this situation.(a) What is the average monthly profit resulting from its policy of stocking 100 pairs of goggles at the beginning of each month? Roundyour answer to the nearest dollar.(b) What is the proportion of months in which demand is completely satisfied? Round your answer to the nearest whole number.(c) use the simulation model to compare the profitability of monthly replenishment levels of 100 and 120 pairs of goggles. Use a 95%confidence interval on the difference between the average profit that each replenishment level generates to make your comparison.Round your answer to the nearest dollar.The average difference between the net profit generated by a replenishment level of 120 versus a replenishment level of 100 is $It means, that mortthly replenishment level ofincreases profitability,120

Fixed cost$300,000Range of variable costLower$128Upper$192most likely$160Selling cost per…

Answered: The management of Madeira Computing is…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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