BK Data $22,000 Selling Price/unit Demad (Uniform Distribution) Fixed cost (Normal Distribution) Lower bound Upper bound 700 Mean 1,100 Standard Dev Variable cost (Discrete Distribution) (a) Probability Lower Limit Upper Limit Variable cost 0.25 $12,000 0.40 $13,000 0.15 $14,000 0.2 $15,000 (b) Answers Sample Size (b) Mean Profit $4,000,000 25,000 (c) Probability (d) VaR 150 Profit (Selling price- unit variable cost)*demand-fixed cost Simulation Table Trial Random Number Fixed cast per unit Random Number Variable cost Random Number Demand 1 0.299 0.695 0.658 2 0.419 0.363 0.248 3 0.826 0.941 0.112 4 0.584 0.299 0.936 5 0.608 0.294 0.149 6 0.043 0.069 0.552 7 0.713 0.171 0.073 8 0.738 0.687 0.599 9 0.977 0.044 0.442 10 0.118 0.552 0.897 146 0.332 0.504 0.580 147 0.024 0.083 0.121 148 0.877 0.491 0.358 149 0.421 0.193 0.199 150 0.395 0.555 0.031 Average Profit 50 points Black Klawson (BK) is considering developing a new machine that will be marketed to tire manufacturers. First, BK wants to analyze the profitability of this machine. The fixed cost is assumed to follow a normal distribution with mean of $4 million and standard deviation of $25,000 The company thinks the demand (in units) for the machine is described by a uniform distribution with lower bound and upper bound 700 and 1100 units respectively. The unit selling price will be $22,000. The variable cost has discrete distribution as shown. (a) Fill in the random number interval blanks (lower and upper limits) in the Variable Cost table. (b) Simulate 150 profits in the given Simulation table and find the mean profit. Remember profit (selling price-variable cost per unit) demand-fixed cost. (c) Find the probability of profit (d) Find the value at risk at 5%.