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 3000 units. The probability distribution for a range of labor cost per unit is given below. $$\begin{array} { c | c }
\text { Labor Cost } & \text { Probability } \
\hline \$ 52 & 0.05 \
\$ 53 & 0.25 \
\$ 54 & 0.40 \
\$ 55 & 0.25 \
\$ 56 & 0.05
\end{array}$$
a. Obtain estimates for the mean profit, maximum profit, minimum profit, and standard deviation of profit.
b. What is your estimate of the probability of a loss?

Question

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 3000 units. The probability distribution for a range of labor cost per unit is given below. $$\begin{array} { c | c } 
\text { Labor Cost } & \text { Probability } \
\hline \$ 52 & 0.05 \
\$ 53 & 0.25 \
\$ 54 & 0.40 \
\$ 55 & 0.25 \
\$ 56 & 0.05
\end{array}$$ ​ 
a. Obtain estimates for the mean profit, maximum profit, minimum profit, and standard deviation of profit.
b. What is your estimate of the probability of a loss?

Quizplus · Accepted Answer

The Answer of 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 3000 units. The probability distribution for a range of labor cost per unit is given below. $$\begin{array} { c | c } 
\text { Labor Cost } & \text { Probability } \
\hline \$ 52 & 0.05 \
\$ 53 & 0.25 \
\$ 54 & 0.40 \
\$ 55 & 0.25 \
\$ 56 & 0.05
\end{array}$$ ​ 
a. Obtain estimates for the mean profit, maximum profit, minimum profit, and standard deviation of profit.
b. What is your estimate of the probability of a loss?

Salemach Corporation Is a Start-Up Company That Manufactures Simple Machines