QUANTITATIVE ANALYSIS

Introduction:

In this task, you are asked to conduct a small number of simulation trials. This task should be completed with manual calculations. Please be aware that the simulation results of such a small number of trials would not be sufficient for one to draw valid conclusions in a real situation. A large number of trials run on a computer would be necessary in order to arrive at a valid conclusion. Random numbers are provided in the attached template; these numbers are discrete, uniform, and between 1 and 100 inclusive.

Scenario:

Management has asked you to help estimate the average cost per unit to produce a new product so that they can project profits at different selling prices. You will conduct a Monte Carlo simulation for cost behavior using provided probabilistic data for the following cost estimates, which are provided in the attached worksheet: cost per unit for materials, labor, and utilities and their probability distributions. In your calculations, round to the nearest cent.