Answered: The unit price is 50$. The company…

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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Question

The demand distribution for a company follows the below Table.

Demand	Probability
40,000	0.1
45,000	0.3
50,000	0.4
55,000	0.15
60,000	0.05

The unit price is 50$. The company produces 50000 units per month. The unit cost follows a continuous Uniform Distribution between $25 and $30. The fixed cost is a Normal Distribution with the mean=500000 and Standard Deviation=60000. Run the simulation 100 times and compute the statistics for the expected profit.

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

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