Concept explainers
a)
To estimate: The expected annual profit of the firm.
Introduction: Simulation model is the digital prototype of the physical model that helps to
b)
To determine: The 95 percent interval for the annual profit of the company.
Introduction: Simulation model is the digital prototype of the physical model that helps to forecast the performance of the system or model in the real world.
c)
To determine: The annual profit of the firm for the given scenario.
Introduction: Simulation model is the digital prototype of the physical model that helps to forecast the performance of the system or model in the real world.
d)
To conclude: The results from part (a) and part (c).
Introduction: Simulation model is the digital prototype of the physical model that helps to forecast the performance of the system or model in the real world.
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Chapter 10 Solutions
Practical Management Science
- A NY Times best-selling author wants to write a new book as either volume II of her earlier successful book or an autobiography. She believes that by writing the volume II, given her previous success, she will have a 50% chance of placing it with a major publisher where it should ultimately sell about 40,000 copies. However, the worst-case scenario, if she can’t get a major publisher to take it, then she thinks there is 80% chance of placing it with a smaller publisher, with sales of 30,000 copies. On the other hand, if she writes an autobiography, considering the potential interest in her journey as successful writer, she thinks there will be 40% chance of placing it with a major publisher, and it should result in ultimate sales of about 50,000 copies. If she can’t get a major publisher to take it, the worst-case scenario, she thinks there is a 50% chance of placing it with a smaller publisher, with ultimate sales of 35,000 copies. Construct a decision tree to help this author…arrow_forwardA 75% leased apartment building that you recently acquired in Las Vegas, Nevada had an estimated annual NOI of $180,000. After you complete some needed renovations and improvements, you believe you can increase the occupancy to 95% while achieving higher rents and reduced operating costs, and you believe the renovated building will sell at a lower cap rate. If you can increase the NOI by 50% and reduce the sale cap rate by 25%, you will increase the sale price of the property by: a. 75% b. 25% c. 50% d. 100%arrow_forwardDiscuss how likely it is that 70% of students will pass a college course with a B or an A. Then, consider the following questions: Would you look at data showing the success rate of previous courses? Would you check whether the current GPA of students in your class is high or low? What other data would you like to have before you determine the probability of 70% of students passing this course with a B or an A?arrow_forward
- Assume that a customer shops at a local grocery store spending an average of $250 a week, resulting in the retailer earning a $40 profit each week from this customer. Assuming the shopper visits the store all 52 weeks of the year, calculate the customer lifetime value if this shopper remains loyal over a 10-year life-span. Also assume a 6 percent annual interest rate and no initial cost to acquire the customer. Part 2 This customer yields __ per year in profits for this retailer. (Round to the nearest dollar.) Part 3 The customer lifetime is __arrow_forwardThe probability that a mobile phone is stolen in an electronic shop is 0.0008. If 8500 mobile phones are sold, what is the approximate Poisson probability that 5 or fewer will be stolen? A- 0.327 B- 0.833 C- 0.781 D- 0.256arrow_forwardWhich of the following interpretations is correct about risk versus uncertainty? Risk is about the known future while uncertainty is about the unknown future Tossing a coin is an example of uncertainty while pandemic is an example of risk Risk is about the unknown unknowns while uncertainty is about the known unknowns Risk is about random variables with estimable chances and possible outcomes while uncertainty is about variables with unknown chances and/or unknown possible outcomesarrow_forward
- Hazard is the cause of a possible loss. is loss possibilities due to negligence resulting in bodily harm or property damage to others. is a risk that carries a chance of either loss or gain. increases the likelihood of loss through some peril. is the chance that something may be lost.arrow_forwardProblem Solving. The JSM company has been approached by an individual who has an idea for a new product. He wants to sell this idea for P32, 000. If the idea is purchased, the product must be developed. The company can develop the product at a cost of P64,000, and there is a 50% chance that they can develop the product. TMJ INDUSTRY has offered to develop the product. It will also cost P65,000, but they are only 40% certain that they can develop the product. No charge will be levied unless the job is successful. If the product is developed, it must be advertised. There are two plans for the advertisement. Plan A which costs P55,000 with 75% chances of success and Plan B which cost P38,000 with a 50% probability of success. The management believes that if the product is a success, the return will be P50 million. a) Should JSM purchase the idea?b.) who should develop the product?c.) which plan of advertisement should be adopted?arrow_forwardWhich of the following is a likely source of basis risk? All of these None of these Crude oil is being used to hedge the price risk of downstream (refined) petroleum product O The termination date of exposure is two weeks later than the contract expiration date. A power plant in the Northeast is managing its input (natural gas) risk using a contract priced at Henry Hub, Louisiana.arrow_forward
- A polling firm is taking a survey regarding a proposed new law. Of the voters polled, 30% are in favor of the law. If 10 people are surveyed, what is the probability that 4 will indicate that they are opposed to the passage of the new law?arrow_forwardWhich of the following could be an example of a purchase money security interest? (Choose all of the incorrect answers.) An engineer who purchases a drafting machine from a scientific-supply company, with payment due to the store in 30 days An attorney who purchases a new conference table from a furniture store with his airline credit card A student who purchases a T-shirt from the bookstore in cash A doctor who writes a check to the medical supply store to purchase a blood pressure machine An architect who purchases a MacBook from the Apple Store, with payment due to the Apple Store in 30 daysarrow_forwardA salesperson uses three different airlines. The probabilities of switching from one airline to another in consecutive flights are shown below. If the last flight was on Delta, what is the probability that the next was on American? American Delta Southwest American 0.5 0.25 0.25 Delta 0.2 0.6 0.2 Southwest 0.3 0.3 0.4 A 0.5 B 0.2 C 0.25 D 0.6arrow_forward
- Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,