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.Management believes the facility construction time will be somewhere from 5 to 9 months.They believe the probabilities of the extremes (5 and 9 months)are both 10%,and the probabilities will vary linearly from those endpoints to a most likely value at 7 months.

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.Management believes the facility construction time will be somewhere from 5 to 9 months.They believe the probabilities of the extremes (5 and 9 months)are both 10%,and the probabilities will vary linearly from those endpoints to a most likely value at 7 months.

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