Exhibit 10-1 a Company Is in the Planning Phase of Constructing a Constructing

question 28

Essay

Exhibit 10-1
A company is in the planning phase of constructing a new production facility. It wants to build a simulation model for the economics of the facility, and one key uncertain input is the construction cost. For each of the scenarios in the questions below, choose an "appropriate" distribution, together with its parameters, and explain your choice.
-Refer to Exhibit 10-1.Management believes the facility construction time will be somewhere from 5 to 9 months.They believe the probabilities of the extremes (5 and 9 months)are both 10%,and the probabilities will vary linearly from those endpoints to a most likely value at 7 months.

---

Definitions:

Slope-intercept Form

An equation of a straight line in the form y = mx + b, where m is the slope and b is the y-intercept.

Slope-intercept Form

A way of writing the equation of a straight line in the form y = mx + b, where m is the slope and b is the y-intercept.

Slope

A measure of the steepness or the inclination of a line, defined as the ratio of the vertical change to the horizontal change.

Sales Price

The amount for which a product is sold to the customer, excluding any discounts or taxes.