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Practical Management Science

6th Edition
WINSTON + 1 other
Publisher: Cengage,
ISBN: 9781337406659
BuyFind

Practical Management Science

6th Edition
WINSTON + 1 other
Publisher: Cengage,
ISBN: 9781337406659

Solutions

Chapter
Section
Chapter 10, Problem 57P
Textbook Problem
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Consider a situation where there is a cost that is either incurred or not. It is incurred only if the value of some random input is less than a specified cutoff value. Why might a simulation of this situation give a very different average value of the cost incurred than a deterministic model that treats the random input as fixed at its mean? What does this have to do with the “flaw of averages”?

Expert Solution
Summary Introduction

To explain: The reason why a simulation of this situation gives a very different average value of the cost incurred compared with a deterministic model.

Simulation modeling:

A simulation model is a computerized model that depicts or imitates a real-life situation. It is like other mathematical models except that it incorporates the concept of uncertainty in one or more number of the input variables.

Explanation of Solution

Illustration of the flaw of averages:

Formula:

The model makes an assumption that there is a random quantity, a level of effort with a mean of 200. If the level of effort is less than a cutoff of 180, a cost of 1,000 is incurred...

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Chapter 10 Solutions

Practical Management Science
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Ch. 10.4 - In the Walton Bookstore example, suppose that...Ch. 10.4 - A sweatshirt supplier is trying to decide how many...Ch. 10.4 - In the Walton Bookstore example with a discrete...Ch. 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 - When you use @RISKs correlation feature to...Ch. 10.6 - Repeat Problem 23, but now make the second input...Ch. 10.6 - The Business School at State University currently...Ch. 10 - Six months before its annual convention, the...Ch. 10 - You have made it to the final round of the show...Ch. 10 - A new edition of a very popular textbook will be...Ch. 10 - A hardware company sells a lot of low-cost,...Ch. 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 - A Flexible Savings Account (FSA) plan allows you...Ch. 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 - In statistics we often use observed data to test a...Ch. 10 - You are making several runs of a simulation model,...Ch. 10 - If you want to replicate the results of a...Ch. 10 - Suppose you simulate a gambling situation where...Ch. 10 - You plan to simulate a portfolio of investments...Ch. 10 - Big Hit Video must determine how many copies of a...Ch. 10 - Many people who are involved in a small auto...Ch. 10 - A building contains 1000 lightbulbs. Each bulb...Ch. 10 - Why is the RISKCORRMAT function necessary? How...Ch. 10 - Consider the claim that normally distributed...Ch. 10 - It is very possible that when you use a...Ch. 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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