**Expected value of profit can be calculated by using formula: Selling price - Expected value of Procurement cost - Expected value of Labour cost - Expected value of Transportation cost**

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StatisticsQ&A Library(All answers were generated using 1,000 trials and native Excel functionality.)The management of Brinkley Corporation is interested in using simulation to estimate the profit per unit for a new product. The selling price for the product will be $45 per unit. Probability distributions for the purchase cost, the labor cost, and the transportation cost are estimated as follows: ProcurementCost ($)ProbabilityLaborCost ($)ProbabilityTransportationCost ($)Probability100.25200.1030.75110.45220.2550.25120.30240.35 250.30 (a)Construct a simulation model to estimate the average profit per unit. What is a 95% confidence interval around this average? Round your answers to two decimal places. Lower Bound: $ Upper Bound: $Question

Asked Dec 11, 2019

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(All answers were generated using 1,000 trials and native Excel functionality.)

The management of Brinkley Corporation is interested in using simulation to estimate the profit per unit for a new product. The selling price for the product will be $45 per unit. Probability distributions for the purchase cost, the labor cost, and the transportation cost are estimated as follows:

ProcurementCost ($) |
Probability |
LaborCost ($) |
Probability |
TransportationCost ($) |
Probability |

10 | 0.25 | 20 | 0.10 | 3 | 0.75 |

11 | 0.45 | 22 | 0.25 | 5 | 0.25 |

12 | 0.30 | 24 | 0.35 | ||

25 | 0.30 |

(a) |
Construct a simulation model to estimate the average profit per unit. What is a 95% confidence interval around this average? |

Round your answers to two decimal places. | |

Lower Bound: $ | |

Upper Bound: $ |

1 Rating

Step 1

**Expected value of profit can be calculated by using formula: Selling price - Expected value of Procurement cost - Expected value of Labour cost - Expected value of Transportation cost**

Step 2

Expected value of Profit = $45 - $11.05- $23.4 - $3.5 = $ 7.05

Step 3

Confidence Interval can be calculated by using the formula shown below

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