Calculating Profit for Cox Electric's New Product

Influence Diagram and Mathematical Model

1.Cox Electric makes electronic components and has estimated the following for a new design of one of its products:
a.Fixed Costs =  $10,000
b.Material cost per unit = $0.15
c.Labor cost per unit = $0.10
d.Revenue per unit = $0.65
Note that the fixed cost is incurred regardless of the amount produced.  Per-unit material and labor cost together make up the variable cost per unit.  Assuming that Cox Electric sells all that it produces, profit is calculated by subtracting the fixed cost and total variable cost from total revenue.
a.Build an influence diagram that illustrates how to calculate profit.
b.Create a mathematical model for calculating profit
c.Create an Excel model using principles of good spreadsheet design
d.If Cox Electric makes 12,000 units of the new product, what is the resulting profit?
2.Use the spreadsheet model constructed above to answer this problem.
a.Construct a one-way data table with production volume as the column input and profit 
b..  Breakeven occurs when profit goes from negative to a positive value; that is, breakeven is when total revenue = total cost, yielding a profit of zero.  Vary production volume from 0 to 100,000 in increments of 10,000.  In which interval does breakeven occur?
c.Use Goal Seek to find the exact breakeven point.  Assign Set cell: equal to the location of profit.  To value: = 0, and By changing cell: equal to the location of the production volume in your model.
3.The University of Cincinnati Center for Business Analytics is an outreach center that collaborates with industry partners on applied research and continuing education in business analytics.  One of the programs offered by the center is a quarterly Business Intelligence Symposium.  Each symposium features three speakers on the real-world use of analytics.  Each corporate member of the center (there are currently 10) receives five free seats to each symposium.  Nonmembers wishing to attend must pay $75 per person.  Each attendee receives breakfast, lunch and free parking. The following are costs incurred for putting on the event:
Rental cost for the auditorium            $150.
Registration processing                $8.50 per person
Speaker Costs                    3@$800 = $2,400.
Continental Breakfast                $4.00 per person
Lunch                        $7.00 per person
Parking                        $5.00 per person
a.Build a spreadsheet model that calculates a profit or loss based on the number of nonmember registrants.
b.Use Goal Seek to find the number of nonmember registrants that will make the event break even.
4.Consider that the Center for Business Analytics mentioned above is considering a refund policy for no-shows.  No refund would be given for members who do not attend, but nonmembers who do not attend will be refunded 50% of the price.  Extend the model you developed above to account for the fact that, historically, 25% of members who register do not show and 10% of registered nonmembers do not attend.  The center pays the caterer for breakfast and lunch based on the number of registrants (not the number of attendees).  However, the center pays for parking only for those who attend.  What is the profit if each corporate member registers their full allotment of tickets and 127 nonmembers register?
5.Use a two-way data table to show how profit changes as a function of the number of registered nonmembers and the no-show percentage of nonmembers.  Vary the number of nonmember registrants from 80 to 160 in increments of 5 and the percentage of nonmember no-shows from 10% to 30% in increments of 2%.