In Example 11.1, the possible profits vary from negative to positive for each of the 10 possible bids examined. a. For each of these, use @RISK’s RISKTARGET function to find the probability that Miller’s profit is positive. Do you believe these results should have any bearing on Miller’s choice of bid? b. Use @RISK’s RISKPERCENTILE function to find the 10th percentile for each of these bids. Can you explain why the percentiles have the values you obtain?

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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 11.2, Problem 2P
Textbook Problem

In Example 11.1, the possible profits vary from negative to positive for each of the 10 possible bids examined.

  1. a. For each of these, use @RISK’s RISKTARGET function to find the probability that Miller’s profit is positive. Do you believe these results should have any bearing on Miller’s choice of bid?
  2. b. Use @RISK’s RISKPERCENTILE function to find the 10th percentile for each of these bids. Can you explain why the percentiles have the values you obtain?

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Chapter 11 Solutions

Practical Management Science
Ch. 11.3 - In the cash balance model from Example 11.5, the...Ch. 11.3 - In the cash balance model from Example 11.5, is...Ch. 11.3 - Run the retirement model from Example 11.6 with a...Ch. 11.3 - The simulation output from Example 11.6 indicates...Ch. 11.3 - Modify the model from Example 11.6 so that you use...Ch. 11.3 - Referring to the retirement example in Example...Ch. 11.3 - A European put option allows an investor to sell a...Ch. 11.3 - Modify Example 11.8 so that the portfolio now...Ch. 11.3 - Change the new car simulation from Example 11.4 as...Ch. 11.3 - Based on Kelly (1956). You currently have 100....Ch. 11.3 - Amanda has 30 years to save for her retirement. At...Ch. 11.3 - In the financial world, there are many types of...Ch. 11.3 - Suppose you currently have a portfolio of three...Ch. 11.3 - If you own a stock, buying a put option on the...Ch. 11.3 - For the data in the previous problem, the...Ch. 11.3 - A stock currently sells for 69. The annual growth...Ch. 11.3 - A knockout call option loses all value at the...Ch. 11.3 - Suppose an investor has the opportunity to buy the...Ch. 11.4 - Suppose that Coke and Pepsi are fighting for the...Ch. 11.4 - Seas Beginning sells clothing by mail order. An...Ch. 11.4 - Based on Babich (1992). Suppose that each week...Ch. 11.4 - The customer loyalty model in Example 11.9 assumes...Ch. 11.4 - We are all aware of the fierce competition by...Ch. 11.4 - Suppose that GLC earns a 2000 profit each time a...Ch. 11.4 - The Mutron Company is thinking of marketing a new...Ch. 11.5 - A martingale betting strategy works as follows....Ch. 11.5 - The game of Chuck-a-Luck is played as follows: You...Ch. 11.5 - You have 5 and your opponent has 10. You flip a...Ch. 11.5 - Assume a very good NBA team has a 70% chance of...Ch. 11.5 - Consider the following card game. The player and...Ch. 11.5 - Based on Morrison and Wheat (1984). When his team...Ch. 11 - You now have 5000. You will toss a fair coin four...Ch. 11 - You now have 10,000, all of which is invested in a...Ch. 11 - Suppose you have invested 25% of your portfolio in...Ch. 11 - A ticket from Indianapolis to Orlando on Deleast...Ch. 11 - Based on Marcus (1990). The Balboa mutual fund has...Ch. 11 - Consider a device that requires two batteries to...Ch. 11 - Appliances Unlimited (AU) sells refrigerators. Any...Ch. 11 - The annual demand for Prizdol, a prescription drug...Ch. 11 - A company is trying to determine the proper...Ch. 11 - The DC Cisco office is trying to predict the...Ch. 11 - A common decision is whether a company should buy...Ch. 11 - Suppose you begin year 1 with 5000. At the...Ch. 11 - You are considering a 10-year investment project....Ch. 11 - Play Things is developing a new Lady Gaga doll....Ch. 11 - An automobile manufacturer is considering whether...Ch. 11 - It costs a pharmaceutical company 75,000 to...Ch. 11 - Suppose you buy an electronic device that you...Ch. 11 - Rework the previous problem for a case in which...Ch. 11 - Chemcon has taken over the production of Nasacure...Ch. 11 - The Tinkan Company produces one-pound cans for the...Ch. 11 - You are unemployed, 21 years old, and searching...Ch. 11 - In this version of dice blackjack, you toss a...Ch. 11 - It is January 1 of year 0, and Lilly is...Ch. 11 - It is January 1 of year 0, and Merck is trying to...Ch. 11 - Suppose you are an HR (human resources) manager at...Ch. 11 - You are an avid basketball fan, and you would like...Ch. 11 - Suppose you are a financial analyst and your...Ch. 11 - Software development is an inherently risky and...Ch. 11 - Health care is continually in the news. Can (or...

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