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?© BrainMass Inc. brainmass.com June 4, 2020, 3:12 am ad1c9bdddf
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
Most likely brick price: $120.00/ton
Most optimistic price: $80.00/ton
Most pessimistic price: $180.00/ton
Expected price of brick per ton = (a + 4m + ...
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.