The management team at Madeira manufacturing company is considering the introduction of a new product. The fixed costs to begin production is $70,000. Since the technology is new, the variable costs are not known precisely, but it is thought that it will be uniformly distributed between $16 and $25. They plan to sell the product for $100 and the demand is best described by a normal distribution with a mean of 1800 and a standard deviation of 400. Required:
a. Develop a what-if spreadsheet model computing profit for this product in the base-case, worst-case, and best-case scenarios.
b. Discuss why simulation would be appropriate for this situation. Would simulation be a preferable approach to analyze this situation? Why or why not?