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) develop a what-if spreadsheet model computing profit for this product in the base case, worst-case, and best-case scenarios.
best-case profit: $
worst-case profit: $
base case profit: $
b) model the variable cost as a uniform random variable with a minimum of $160 and a maximum of $240. model product demand as 1,000 times the value of a gamma random variable with an alpha parameter of 3 and a beta parameter of 2. construct a simulation model to estimate the average profit and the probability that the project will result in a loss.
average profit: $
probabilty of a loss: %