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

Essay

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?