Problem 1: Microcomp is a U.S.-based manufacturer of personal computers. It is planning to build a new manufacturing and distribution facility in either South Korea, China, Taiwan, the Philipines, or Mexico. It will take approximately 5 years to build the necessary infrastructure (roads, etc.), construct the new facility, and put it into operation. The eventual cost of the facility will differ between countries and will even vary within countries depending on the financial, labor, and political climate, including monetary exchange rates. The company has estimated the facility cost (in $1,000,000s) in each country under three different future economic and political climates, as follows:
Economic/Political Climate
Country Decline Same Improve
South Korea 21.7 19.1 15.2
China 19.0 18.5 17.6
Taiwan 19.2 17.1 14.9
Philippines 22.5 16.8 13.8
Mexico 25.0 21.2 12.5
Determine the best decision, using the following decision criteria.
a. Minimin
b. Minimax
c. Hurwicz (α = .4)
d. Equal likelihood
Problem 2: Every time a machine breaks down at the Dynaco Manufacturing Company, either 1, 2, or 3 hours are required to fix it, according to the following probability distribution:
Repair Time (hr.) Probability
1 .30
2 .50
3 .20
1.00
a. Simulate the repair time for 20 weeks and then compute the average weekly repair time.
b. If the random numbers that are used to simulate breakdowns per week are also used to simulate repair time per breakdown, will the results be affected in any way? Explain.
c. If it costs $50 per hour to repair a machine when it breaks down (including lost productivity), determine the average weekly breakdown cost.
d. The Dynaco Company is considering a preventative maintenance program that would alter the probabilities of a machine breakdowns per week as shown in the following table:
Machine Breakdowns
Per week Probability
0 .20
1 .30
2 .20
3 .15
4 .10
5 .05
1.00
The weekly cost of the preventive maintenance program is $150. Using simulation, determine whether the company should institute the preventive maintenance program.
Problem 3: The Dynaco Manufacturing Company produces a product in a process consisting of operations of five machines. The probability distribution of the number of machines that will break down in a week follows:
Per Week Probability
0 .10
1 .10
2 .20
3 .25
4 .30
5 .05
a. Simulate the machine breakdowns per week for 20 weeks.
b. Compute the average number of machines that will break down per week.