Sunseel Industries Produces Different Types of Raw Materials and It

question 27

Essay

Sunseel Industries produces different types of raw materials and it is interested in using simulation to estimate the profit per unit for its new product X. The selling price for the product will be $40 per unit. Probability distributions for the raw material cost, the production cost, and the marketing cost are estimated as follows:
a. Compute profit per unit for the base case, worst case, and best case.
b. Construct a simulation model to estimate the mean profit per unit.
c. Management believes the project may not be sustainable if the profit per unit is less than $2. Use simulation to estimate the probability the profit per unit will be less than $2.

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Definitions:

Incremental Marketing Effort

Additional marketing activities conducted to boost sales or market penetration, beyond the existing marketing plan.

Target Markets

Specific groups of potential customers at whom a company directs its marketing efforts.

Marketing Mix

A combination of factors that can be controlled by a company to influence consumers to purchase its products. These include product, price, place, and promotion.

Industry Trends

Patterns or general directions in which a specific industry is moving, often determined by changes in technology, consumer behavior, or regulatory environments.