Assignment:
1. 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 the costs incurred for putting on this event:
Rental cost for the auditorium $150
Registration processing $8.50 per person
Speaker costs (3 speakers $800 each)
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 total number of 100 nonmember registrants.
b) Use Goal Seek to find the number of nonmember registrants that will make the event break even.
2. Grear Tire Company has produced a new tire with an estimated mean lifetime mileage of 36,500 miles. Management also believes that the standard deviation is 5,000 miles and that tire mileage is normally distributed. To promote the new tire, Grear has offered to refund some money if the tire fails to reach 30,000 miles before the tire needs to be replaced. Specifically, for tires with a lifetime below 30,000 miles, Grear will refund a customer $1 per 100 miles short of 30,000.
a) For each tire sold, what is the expected cost of the promotion?
b) Please perform the simulation for 1000 times, what is the probability that Grear will refund more than $50 for a tire?
3. The management of Brinkley Corporation is interested in using simulation to estimate the profit per unit for a new product. The selling price for the product will be $45 per unit. Probability distributions for the purchase cost, the labor cost, and the transportation cost are estimated as follows:
|
Procurement Cost ($)
|
Probability
|
Labor Cost ($)
|
Probability
|
Transportation Cost ($)
|
Probability
|
|
10
|
0.25
|
20
|
0.10
|
3
|
0.75
|
|
11
|
0.45
|
22
|
0.25
|
5
|
0.25
|
|
12
|
0.30
|
24
|
0.35
|
|
|
|
|
|
25
|
0.30
|
|
|
a) Construct a simulation model to estimate the mean profit per unit.
b) Management believes that the project may not be sustainable if the profit per unit is less than $5. Use simulation to estimate the probability that the profit per unit will be less than $5.
4. Galaxy Co. distributes wireless routers to Internet service providers. Galaxy procures each router for $75 from its supplier and sells each router for $125. Monthly demand for the router is a normal random variable with a mean of 100 units and a standard deviation of 20 units. At the beginning of each month, Galaxy orders enough routers from its supplier to bring the inventory level up to 100 routers. If the monthly demand is less than 100, Galaxy pays $15 per router that remains in inventory at the end of the month. If the monthly demand exceeds 100, Galaxy sells only the 100 routers in stock. Galaxy assigns a shortage cost of $30 for each unit of demand that is unsatisfied to represent a loss-ofgoodwill among its customers. Management would like to use a simulation model to analyze this situation. Perform the simulation for 1000 times, what is the average monthly profit resulting from its policy of stocking 100 routers at the beginning of each month?