A company's profit function is given by:
Profit = (p - cL - cP)xQ - cA where p = selling price per unit, cL = direct labor costs per unit, cP = parts cost per unit, Q = quantity
demanded, and cA = total advertising costs.
The firm knows, with certainty, that p = $249 and cA = $1,000,000.
Suppose cL follows the following discrete probability distribution:
cL Probability
$43 0.10
$44 0.10
$45 0.10
$46 0.30
$47 0.40
Assume cP follows a continuous uniform distribution between $85 and $95.
Assume Q follows a normal distribution with a mean of 15,000 and a standard deviation of 4,000.
Conduct a simulation using 1000 trials to estimate profits.
