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# Estimating Price and Quantity of Bricks Using Expected Costs

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A building project requires the use of a special brick.

a) The most likely brick price is \$120.00/ton but this price is volatile and fluctuates. The most optimistic price is \$80.00/ton and the most pessimistic price is \$180.00/ton. (Note there are 3 data points in for this estimate.)

What is the expected price of the brick?

b) Also, I'm uncertain how much of the brick I'll need. I have to wait and see what the building site conditions are like and what changes the owners have in mind. I think I'll most likely need 36 tons but could require as little as 28 tons, or as much as 56 tons.

How much of the brick can I expect to use?

c) Based on the estimates, what is my expected cost for the brick using the COMPLEX method?

#### Solution Preview

a. The formula for the Expected price of brick is (a + 4m + b)/6
Where a = optimistic price, b = pessimistic price and m = most likely price
Given:
Most likely brick price: \$120.00/ton
Most optimistic price: \$80.00/ton
Most pessimistic price: \$180.00/ton

Solution:
Expected price of brick per ton = (a + 4m + ...

#### Solution Summary

The solution computes for the expected price of bricks and the quantity of bricks to order given the most likely, most optimistic, and most pessimistic price scenarios.

\$2.19