Use the Information Below to Answer the Following Question(s) We Assume That the Production (Demand) Volume Is Normally Distributed

question 42

Multiple Choice

Use the information below to answer the following question(s) . Consider the following spreadsheet for an outsourcing decision model. $\begin{array}{|l|c|c|}\hline & \text { A } & \text { B } \\\hline 1 & \text { OutsourcingDecision Model } & \\\hline 2 & & \\\hline 3 & \text { Data } & \\\hline 4 & & \\\hline 5 & \text { Manufactured in-house } & \\\hline 6 & \text { Fixed cost } & \$ 60,000 \\\hline 7 & \text { Unit variable cost } & \$ 130 \\\hline 8 & & \\\hline 9 & \text { Purchased from supplier } & \\\hline 10 & \text { Unit cost } & \$ 165 \\\hline 11 & & \\\hline 12 & \text { Demand volume } & 1,000 \\\hline 13 & \\\hline 14 & \text { Model } \\\hline 15 & \\\hline 16 & \text { Total manufacturing cost } \\\hline 17 & \text { Total purchased cost } \\\hline 18 & \\\hline 19 & \text { Difference } \\\hline 20 & \text { Decision } \\\hline\end{array}$ We assume that the production (demand) volume is normally distributed with a mean of 1,000 and a standard deviation of 100. For the unit cost, select the triangular distribution. It has a minimum value of $150, most likely value of $165, and a maximum value of $190. The number of trials per simulation is equal to 5,000 at a Sim. Random Seed of 1. Run the simulation and answer the following question(s) using the Risk Solver Platform.
-What is the value of mean absolute deviation obtained from the simulation results?

• A) $10,893
• B) $3,476
• C) $7,443
• D) $5,885

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Definitions:

Systematic Desensitization

A behavioral therapy technique used to reduce phobic responses through gradual exposure to the feared object or situation paired with relaxation exercises.

Free Association

A psychoanalytic technique in which a patient says whatever comes to mind without censorship as a way of uncovering the unconscious mind.

Operant Conditioning

A method of learning that employs rewards and punishments for behavior, reinforcing certain behaviors and dissuading others.

Psychodynamic Therapy

A therapeutic approach emphasizing unconscious processes and past experiences affecting current behavior.