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 $45 per unit. Probability distributions for the purchase cost, the labor cost, and the transportation cost are estimated as follows: ProcurementCost ($)ProbabilityLabor Cost ($)ProbabilityTransportationCost ($)Probability100.25200.1030.75110.45220.2550.25120.30240.35 250.30 Compute profit per unit for the base-case, worst-case, and best-case.Profit per unit for the base-case: $ fill in the blank 1Profit per unit for the worst-case: $ fill in the blank 2Profit per unit for the best-case: $ fill in the blank 3Construct a simulation model to estimate the mean profit per unit. If required, round your answer to the nearest cent.Mean profit per unit = $ fill in the blank 4Why is the simulation approach to risk analysis preferable to generating a variety of what-if scenarios?The input in the box below will not be graded, but may be reviewed and considered by your instructor.Management believes the project may not be sustainable if the profit per unit is less than $5. Use simulation to estimate the probability the profit per unit will be less than $5. If required, round your answer to two decimal places.fill in the blank 6%

Answered: The management of Brinkley Corporation…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter11: Simulation Models

Section: Chapter Questions

Problem 56P: A common decision is whether a company should buy equipment and produce a product in house or...

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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:

Procurement Cost ($)	Probability	Labor Cost ($)	Probability	Transportation Cost ($)	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

Compute profit per unit for the base-case, worst-case, and best-case.

Profit per unit for the base-case: $  fill in the blank 1

Profit per unit for the worst-case: $  fill in the blank 2

Profit per unit for the best-case: $  fill in the blank 3
Construct a simulation model to estimate the mean profit per unit. If required, round your answer to the nearest cent.

Mean profit per unit = $ fill in the blank 4
Why is the simulation approach to risk analysis preferable to generating a variety of what-if scenarios?

The input in the box below will not be graded, but may be reviewed and considered by your instructor.
Management believes the project may not be sustainable if the profit per unit is less than $5. Use simulation to estimate the probability the profit per unit will be less than $5. If required, round your answer to two decimal places.

fill in the blank 6%

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