Exhibit 10-1
A company is in the planning phase of constructing a new production facility. It wants to build a simulation model for the economics of the facility, and one key uncertain input is the construction cost. For each of the scenarios in the questions below, choose an "appropriate" distribution, together with its parameters, and explain your choice.
-Refer to Exhibit 10-1.Company management currently has no idea what the distribution of the construction cost is.All they can state is that "we think it will be somewhere between $5,000,000 and $8,000,000."

Question

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The Answer of Exhibit 10-1
A company is in the planning phase of constructing a new production facility. It wants to build a simulation model for the economics of the facility, and one key uncertain input is the construction cost. For each of the scenarios in the questions below, choose an "appropriate" distribution, together with its parameters, and explain your choice.
-Refer to Exhibit 10-1.Company management currently has no idea what the distribution of the construction cost is.All they can state is that "we think it will be somewhere between $5,000,000 and $8,000,000."

Exhibit 10-1 a Company Is in the Planning Phase of Constructing a Constructing