Create a Distribution of Random Numbers That Would Result in Average

question 4

Essay

Create a distribution of random numbers that would result in average demand per period for a Monte Carlo simulation that is equivalent to the expected demand per period using the data given by the chart below.
$$\begin{array} { | c | c | c | c | } \hline \text { Demand } & \text { Probability } & \begin{array} { c } \text { Cumulative } \\\text { Probability }\end{array} & \begin{array} { c } \text { Interval of Random } \\\text { Numbers }\end{array} \\\hline 0 & .1 & & \\\hline 1 & .15 & & \\\hline 2 & .4 & & \\\hline 3 & .15 & & \\\hline 4 & .2 & & \\\hline\end{array}$$

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Definitions:

Cost Volume Profit Analysis

A financial analysis tool used to determine the changes in costs and volume on an organization's profit.

Cost-Plus Pricing

A pricing strategy where a fixed percentage is added to the total cost of producing a product or service to determine its selling price.

Fixed Costs

Costs that do not vary with the level of production or sales over a short period, such as rent, salaries, and insurance premiums.

Variable Costs

Costs that change in direct proportion to changes in the level of production or sales activity, such as raw materials and labor.