A manufacturer determines that he must receive 10% over production costs—or a minimum of $5 per unit—to make the manufacturing effort worthwhile. He also wants to set the maximum price for the product at $15 per unit, so that he can gain a sales advantage by offering the product for less than his nearest competitor. All values between $5 and $15 per unit have the same likelihood of being the actual product price, however he wants to limit the price to whole dollars.
The first step in selecting a probability distribution is matching the data with a distribution’s conditions. Checking the uniform distribution:
You would enter these values in Crystal Ball to produce a discrete uniform distribution showing that all whole dollar values from $5 to $15 occur with equal likelihood. Figure 98, Discrete Uniform Distribution illustrates this scenario.
