The management of Maderira Manufacturing Company is considering the introduction of a new product. The fixed cost to begin the production of the product is 30,000. The variable cost is between 16 and 24 with a most likely value of 20 per unit. The product will sell for 50 per unit. Demand for the product is expected to range from 300 to 2100 units. with 1200 units the most likely demand.
A. Develop the profit model for this product.
B. Provide the base case, worst case and best case analysis
C. Discuss why simulation would be desirable.