A company is about to develop and then market a new product. It wants to build a simulation model for the entire process, and one key uncertain input is the development cost. For each of the scenarios in the questions below, choose an "appropriate" distribution, together with its parameters, and explain your choice.
-(A) Company experts have no idea about the distribution of their development cost. All they can state is that "we are 90% sure it will be somewhere between $450,000 and $650,000."

(B) Company experts can still make the same two statements as in (A), but now they can also state that "we believe the distribution is symmetric and its most likely value is about $550,000."

(C) Company experts can still make the same two statements as in (A), but now they can also state that "we believe the distribution is skewed to the right, and its most likely value is about $500,000."

Question

A company is about to develop and then market a new product. It wants to build a simulation model for the entire process, and one key uncertain input is the development cost. For each of the scenarios in the questions below, choose an "appropriate" distribution, together with its parameters, and explain your choice.
-(A) Company experts have no idea about the distribution of their development cost. All they can state is that "we are 90% sure it will be somewhere between $450,000 and $650,000."
​
(B) Company experts can still make the same two statements as in (A), but now they can also state that "we believe the distribution is symmetric and its most likely value is about $550,000."
​
(C) Company experts can still make the same two statements as in (A), but now they can also state that "we believe the distribution is skewed to the right, and its most likely value is about $500,000."

Quizplus · Accepted Answer

The Answer of A company is about to develop and then market a new product. It wants to build a simulation model for the entire process, and one key uncertain input is the development cost. For each of the scenarios in the questions below, choose an "appropriate" distribution, together with its parameters, and explain your choice.
-(A) Company experts have no idea about the distribution of their development cost. All they can state is that "we are 90% sure it will be somewhere between $450,000 and $650,000."
​
(B) Company experts can still make the same two statements as in (A), but now they can also state that "we believe the distribution is symmetric and its most likely value is about $550,000."
​
(C) Company experts can still make the same two statements as in (A), but now they can also state that "we believe the distribution is skewed to the right, and its most likely value is about $500,000."

A Company Is About to Develop and Then Market a New