Estimate of the probability of a loss Assignment | Get Paper Help
Salemach Corporation is a start-up company that manufactures simple machines. It is interested in analyzing the profit from a new machine. It estimates that the selling price will be $150 per unit and the setup and advertising costs will total $250,000. The company estimates that the per unit raw material cost is uniformly distributed between $50 and $80 and are equally likely. The demand is normally distributed with a mean of 12,000 units and a standard deviation of 3,000 units. The probability distribution for a range of labor cost per unit is given below.
Labor Cost
Probability
$52
0.05
$53
0.25
$54
0.40
$55
0.25
$56
0.05
Obtain estimates for the mean profit, maximum profit, minimum profit, and standard deviation of profit.
What is your estimate of the probability of a loss?
Solution:
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