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

question 2

Multiple Choice

Use the information below to answer the following question(s) .
Consider the following spreadsheet for an outsourcing decision model.
$$\begin{array} { | l | l | l | } \hline 1 & \ { \text { A } } & \text { B } \\\hline 2 & \text { Outsourcing Decision Model } & \\\hline 3 & \text { Data } & \\\hline 4 & & \\\hline 5 & \text { Manufactured in-house } & \\\hline 6 & \text { Fixed cost } & \$ 60,000 \\\hline 7 & \text { Unit variable cost } & \$ 130 \\\hline 8 & & \\\hline 9 & \text { Purchased from supplier } & \\\hline 10 & \text { Unit cost } & \$ 180 \\\hline 11 & & \\\hline 12 & \text { Demand volume } & \$ 1,600 \\\hline 13 & & \\\hline 14 & \text { Model } & \\\hline 15 & & \\\hline 16 & \text { Total manufacturing cost } & \\\hline 17 & \text { Total purchased cost } & \\\hline 18 & & \\\hline 19 & \text { Difference } & \\\hline 20 & \text { Decision } & \\\hline\end{array}$$
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)$7,412
• D)$5,885

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Definitions:

Equilibrium Price

The price at which the quantity of goods supplied is equal to the quantity of goods demanded.

Quota Price

The cost associated with acquiring a quota, which is a government-imposed limit on the quantity of a good that can be imported or exported.

Quota Rent

Revenue earned by the holder of a production or import quota, representing the market price minus the supply price under the quota limit.

Missed Opportunity

The failure to seize potential benefits due to lack of action or decision in a timely manner.