A manufacturer of Bluetooth headphones examines the historical demand of its product and learns that the average monthly demand is about 2,980 headphones but varies between 2,400 and 4,000 headphones. Each pair of the headphones has a retail price of $70. The monthly fixed production cost ranges from $6,300 to $9,000, with an average of $8,500. The average variable cost of producing a pair of headphones is $27, but because the manufacturing process is not fully automated, the variable cost may vary between $21 and $51 per pair. Develop a risk analysis model to answer the following questions. a. What is the monthly profit from the Bluetooth headphones for the most likely, pessimistic, and optimistic scenarios? Scenario Worst case Most likely case Best case Profit b. The company notices that during the holiday season in December, the demand tends to be higher than in other months. Historically, the demand in December is about 3,468 pairs on average, but also ranges from 2,585 to 4,657 pairs. What is the December profit for the most likely, pessimistic, and optimistic scenarios? Scenario Worst case Most likely case Best case Profit

A manufacturer of Bluetooth headphones examines the historical demand of its product and learns that the average monthly demand is about 2,980 headphones but varies between 2,400 and 4,000 headphones. Each pair of the headphones has a retail price of $70. The monthly fixed production cost ranges from $6,300 to $9,000, with an average of $8,500. The average variable cost of producing a pair of headphones is $27, but because the manufacturing process is not fully automated, the variable cost may vary between $21 and $51 per pair. Develop a risk analysis model to answer the following questions. a. What is the monthly profit from the Bluetooth headphones for the most likely, pessimistic, and optimistic scenarios? Scenario Worst case Most likely case Best case Profit b. The company notices that during the holiday season in December, the demand tends to be higher than in other months. Historically, the demand in December is about 3,468 pairs on average, but also ranges from 2,585 to 4,657 pairs. What is the December profit for the most likely, pessimistic, and optimistic scenarios? Scenario Worst case Most likely case Best case Profit

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 5E

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