2013

ASSIGNMENT
Business Data Analysis

Nishant [Type the company name] 7/3/2013

Task 1
How many cards should be printed?
In order to obtain to obtain how many cards to produce we have simulated all the quantity i.e. 10000, 20000, 40000 and 60000 so many times (1000 Iterations). If the units sold are less then production in that case left over will be dispose with extra cost of 0.20 per card. Otherwise no extra disposal cost is required. Correspondingly profit is calculated. Each time 1000 iteration in taken and we compute the Standard deviation for simulated profits for each order quantity. Always 40000 yield maximum expected profit so its better to produce 40000 cards.

If Laura produces 20,000 cards instead of 40,000 cards, how does this change affect her expected profit?
If Laura produce 20000 risk reduces by 73 percent but at the same time expected profit drops by 22 percents as measured by standard deviation of profit. So in case she doesnt want to take risk, then producing 20000 cards might be the right decision.

Into what interval should she be 95 percent sure the true mean profit will fall?
Mean profit is calculated for 95 percent confidence interview for 40000 cards and its come to be minimum value of 53859.79 and maximum value of 59933.56. It has been calculate using given formula:

95% CI for mean profit ordering 40,000 calendars

Lower Upper

53859.79 59933.56

We are 95 percent sure that our profit is in between above range if we produce 40000 cards.

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Task 2
Develop the profit model for the first year.
PROFIT MODEL FOR ONE YEAR Sales Gross Income Expenses: Fixed Cost Administration Cost Advertising Cost Variable Cost Labor cost Parts cost Total Expenses Profit 3|Page 3735000 3735000

400000 600000 675000 1350000 3025000 710000

 Using the profit model work out the.

i. ii. iii. Base-case scenario Worst-case scenario Best-case scenario

Profit model Based on Scenario:

Base Case Direct labor Cost(per unit) Parts cost(per unit) Demand Selling Price(per unit) 45 90 15000 249

Best Case 43 80 28500 249

Worst Case 47 100 1500 249

Base Sales demand Total sales Total Labor cost Total Parts cost 15000 3735000 675000 1350000

Best 28500 7096500 1225500 2280000

Worst 1500 373500 70500 150000

Base Case Scenario:

Values (Scenario Based) Sales Gross Income Expenses labor cost Parts cost Administration Cost Advertising Cost Total Expenses Profit 3735000 3735000

675000 1350000 400000 600000 3025000 710000

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Best Case Scenario:

Values (Scenario Based) Sales Gross Income Expenses labor cost Parts cost Administration Cost Advertising Cost Total Expenses Profit 7096500 7096500

1225500 2280000 400000 600000 4505500 2591000

Worst Case Scenario:

Values (Scenario Based) Sales Gross Income Expenses labor cost Parts cost Administration Cost Advertising Cost Total Expenses Profit 373500 373500

70500 150000 400000 600000 1220500 -847000

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