Use the Table Below to Answer the Following Questions) -Which of the Following Is the Root Cause for the Pharmaceuticals

Multiple Choice

Use the table below to answer the following questions) .
Dresden Pharmaceuticals has decided to go ahead and start clinical trials on a potential new drug. The total R&D costs are estimated to reach around $875,000,000 with clinical trials mounting to
$145,000,000. The current market size is estimated to be around 3,000,000 and is expected to grow at 4 percent every year. The market share Dresden hopes to capture in the first year is 7 percent, and is projected to grow by 25 percent each year for the next 4 years. A monthly
prescription is anticipated to generate revenue of $420 while incurring variable costs of $150. A discount rate of 8 percent is assumed. $$\begin{array} { | l | l | } \hline \text { Dresden Pharmaceuticals } & \\\hline & \\\hline \text { Data } & \\\hline & \\\hline \text { Market Size } & 3,000,000 \\\hline \text { Unit monthly Rx) revenue \$) } & 420 \\\hline \text { Unit monthly Rx) cast \$) } & 150 \\\hline \text { Discount Rate per cent) } & 8 \\\hline & \\\hline \text { Project Costs } & \\\hline \text { R\&D \$) } & 875,000,000 \\\hline \text { Clinical Trials \$) } & 145,000,000 \\\hline & \\\hline\end{array}$$
-Which of the following is the root cause for the newsvendor problem?

A) uncertainty in supply
B) uncertainty in demand
C) high cost per unit sale
D) high total production cost