Business, 10.03.2020 01:35 joshuahagerman1404

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 for the product is expected to range from 0 to approximately 20,000 units, with 4,000 units the most likely.

a. Compute profit for the base-case, worst-case, and best-case scenarios.
b. Assume the variable cost is a uniform random variable between $16 and $24 and the product demand is an exponential random variable with a mean of 4000 units. Construct a simulation model to estimate the mean profit and the probability that the project will result in a loss.

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