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.

Procurement Probability    Labor Probability    Transportation 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

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

b. Construct a simulation model to estimate the mean profit per unit.

c. Why is the simulation approach to risk analysis preferable to generating a variety of what-if scenarios?

d. 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.