**Introduction:**

The following task, in which you are asked to conduct a small number of simulation trials, should be done 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.**Given:**

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. Cost per unit for materials, labor, and utilities and their probability distributions are provided in the attached worksheet. In your calculations, round to the nearest cent.

Materials:

• The probability is .18 that the cost will be $33.

• The probability is .23 that the cost will be $35.

• The probability is .32 that the cost will be $38.

• The probability is .27 that the cost will be $39.

Labor:

• The probability is .12 that the cost will be $22.

• The probability is .18 that the cost will be $23.

• The probability is .22 that the cost will be $24.

• The probability is .28 that the cost will be $25.

• The probability is .20 that the cost will be $28.

Utilities:

• The probability is .26 that the cost will be $3.

• The probability is .43 that the cost will be $4.

• The probability is .31 that the cost will be $6.

Subject | Business |

Due By (Pacific Time) | 10/31/2014 12:00 am |

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