# The management of Madeira Computing is considering the introduction of a wearable electronic device with the functionality of a laptop

The management of Madeira Computing is considering the introduction of a wearable electronic device with the functionality of a laptop computer and phone. The fixed cost to launch this new product is $300,000. The variable cost for the product is expected to be between $169 and $249, with a most likely value of $209 per unit. The product will sell for $300 per unit. Demand for the product is expected to range from 0 to approximately 20,000 units, with 4,000 units the most likely.

Required:

a. Develop a what-if spreadsheet model computing profit (in $) for this product in the base-case, worst-case, and best-case scenarios.

b. Model the variable cost as a uniform random variable with a minimum of $169 and a maximum of $249.

c. Model the product demand as 1,000 times the value of a gamma random variable with an alpha parameter of 3 and a beta parameter of 2.