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.
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?