Practical Management Science
Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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Textbook Question
Chapter 10, Problem 29P

Six months before its annual convention, the American Medical Association must determine how many rooms to reserve. At this time, the AMA can reserve rooms at a cost of $150 per room. The AMA believes the number of doctors attending the convention will be normally distributed with a mean of 5000 and a standard deviation of 1000. If the number of people attending the convention exceeds the number of rooms reserved, extra rooms must be reserved at a cost of $250 per room.

  1. a. Use simulation with @RISK to determine the number of rooms that should be reserved to minimize the expected cost to the AMA. Try possible values from 4100 to 4900 in increments of 100.
  2. b. Redo part a for the case where the number attending has a triangular distribution with minimum value 2000, maximum value 7000, and most likely value 5000. Does this change the substantive results from part a?

a)

Expert Solution
Check Mark
Summary Introduction

To determine: The number of rooms that should be reserved to minimize the expected cost.

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.

Explanation of Solution

Practical Management Science, Chapter 10, Problem 29P , additional homework tip  1

Practical Management Science, Chapter 10, Problem 29P , additional homework tip  2

Formulae to determine the above table:

Practical Management Science, Chapter 10, Problem 29P , additional homework tip  3

Output results:

Run simulation by placing the cursor on B15.

In the @RISK click start simulation to develop the following output results:

Practical Management Science, Chapter 10, Problem 29P , additional homework tip  4

The average cost minimized between 4500 and 4900.

b)

Expert Solution
Check Mark
Summary Introduction

To determine: The number of rooms that should be reserved to minimize the expected cost.

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.

Explanation of Solution

Practical Management Science, Chapter 10, Problem 29P , additional homework tip  5

Practical Management Science, Chapter 10, Problem 29P , additional homework tip  6

Formulae to determine the above table:

Practical Management Science, Chapter 10, Problem 29P , additional homework tip  7

Output results:

Run simulation by placing the cursor on B16.

In the @RISK click start simulation to develop the following output results:

Practical Management Science, Chapter 10, Problem 29P , additional homework tip  8

Here, the best number of rooms reserved is somewhat smaller than the numbers in part (a). The average cost is not lower than part (a).

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Chapter 10 Solutions

Practical Management Science

Ch. 10.4 - Prob. 13PCh. 10.4 - Prob. 14PCh. 10.4 - Prob. 15PCh. 10.5 - If you add several normally distributed random...Ch. 10.5 - In Problem 11 from the previous section, we stated...Ch. 10.5 - Continuing the previous problem, assume, as in...Ch. 10.5 - In Problem 12 of the previous section, suppose...Ch. 10.5 - Use @RISK to analyze the sweatshirt situation in...Ch. 10.5 - Although the normal distribution is a reasonable...Ch. 10.6 - When you use @RISKs correlation feature to...Ch. 10.6 - Prob. 24PCh. 10.6 - Prob. 25PCh. 10.6 - Prob. 28PCh. 10 - Six months before its annual convention, the...Ch. 10 - Prob. 30PCh. 10 - A new edition of a very popular textbook will be...Ch. 10 - Prob. 32PCh. 10 - W. L. Brown, a direct marketer of womens clothing,...Ch. 10 - Assume that all of a companys job applicants must...Ch. 10 - Lemingtons is trying to determine how many Jean...Ch. 10 - Dilberts Department Store is trying to determine...Ch. 10 - It is surprising (but true) that if 23 people are...Ch. 10 - Prob. 40PCh. 10 - At the beginning of each week, a machine is in one...Ch. 10 - Simulation can be used to illustrate a number of...Ch. 10 - Prob. 43PCh. 10 - Prob. 46PCh. 10 - If you want to replicate the results of a...Ch. 10 - Suppose you simulate a gambling situation where...Ch. 10 - Prob. 49PCh. 10 - Big Hit Video must determine how many copies of a...Ch. 10 - Prob. 51PCh. 10 - Prob. 52PCh. 10 - Why is the RISKCORRMAT function necessary? How...Ch. 10 - Consider the claim that normally distributed...Ch. 10 - Prob. 55PCh. 10 - When you use a RISKSIMTABLE function for a...Ch. 10 - Consider a situation where there is a cost that is...
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