quantitative methods graduate level


A copier was purchased for $18,000 by loan.

They needed an estimate of just how much money they might lose if they did not have a backup copier.  To get this estimate, they decided to develop a simulation model. First, they needed to know how frequently the copier might break down, specifically the time between breakdowns.  It was estimated that the time between breakdowns was probably between 0 and 6 weeks with the probability increasing the longer the copier went without breakdowns . Repair time looks like:

REPAIR TIME (DAYS)                     PROBABILITY

1                                                          .20

2                                                          .45

3                                                          .25

4                                                          .10


The needed to know how much business they would lose while waiting for the copier to be fixed.  The final estimate was they would sell between 2,000 and 8,000 copies per day at $0.10 per copy.   They decided to use a uniform probability distibution between 2,000 and 8,000 copies to estimate the number of copies they would sell per day.

If their loss of revenue due to machine breakdown during year 1 was $12,000 or more, they need to purchase a backup copier.  The need to simulate the breakdown and repair process for a number of years to obtain an average annual loss of revenue.  First they decided to do a manual simulation             

1.  In EXCEL, use a suitable method for generating the number of days needed to repair the copier when it is

         out of  service according to the discrete distribution shown. 

#2. In EXCEL , use a suitable method for simulationg the interval between succcessive breakdowns, according to

        the continuous distribution shown.   

#3. In EXCEL use a suitable method for simulationg the lost revenue for each day the copier is out of


#4.  Put all of this together to simulate the lost revenue due to copier breakdown over a 1 year period.

#5.  Using WORD, write a brief description/explanation of how you implemented each component of the

         2 paragraphs for EACH component of the model (day to day repair = 2 paragraphs) 

         (interval between breakdowns = 2 paragraphs)lost revenue = 2 paragraphs) and (putting it all

          together = 2 paragraphs).

#6.  Answer the question Should they buy a new copier as a backup?  What are the limits of this study. Explain in one paragraph.





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