Production and Operations Analysis, Seventh Edition
7th Edition
ISBN: 9781478623069
Author: Steven Nahmias, Tava Lennon Olsen
Publisher: Waveland Press, Inc.
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Chapter 12.1, Problem 4P
Summary Introduction
Interpretation: Z score and fraction of denied applicants needs to be calculated based on the given data.
Concept Introduction: Z score is an important statistical metric on basis of which probabilities can be calculated within
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Chapter 12 Solutions
Production and Operations Analysis, Seventh Edition
Ch. 12.1 - Prob. 2PCh. 12.1 - Prob. 3PCh. 12.1 - Prob. 4PCh. 12.1 - Prob. 5PCh. 12.1 - Prob. 6PCh. 12.2 - Prob. 7PCh. 12.2 - Prob. 8PCh. 12.2 - Prob. 9PCh. 12.2 - Prob. 10PCh. 12.2 - Prob. 11P
Ch. 12.2 - Prob. 12PCh. 12.2 - Prob. 13PCh. 12.3 - Prob. 14PCh. 12.3 - Prob. 15PCh. 12.3 - Prob. 16PCh. 12.3 - Prob. 17PCh. 12.4 - Prob. 18PCh. 12.4 - Prob. 19PCh. 12.4 - Prob. 20PCh. 12.4 - Prob. 21PCh. 12.5 - Prob. 22PCh. 12.6 - Prob. 23PCh. 12.6 - Prob. 24PCh. 12.6 - Prob. 25PCh. 12.6 - Prob. 26PCh. 12.6 - Prob. 27PCh. 12.6 - Prob. 28PCh. 12.9 - Prob. 29PCh. 12.9 - Prob. 30PCh. 12.9 - Prob. 31PCh. 12.9 - Prob. 32PCh. 12.9 - Prob. 33PCh. 12.10 - Prob. 34PCh. 12.10 - Prob. 35PCh. 12.10 - Prob. 37PCh. 12.10 - Prob. 38PCh. 12.10 - Prob. 39PCh. 12.10 - Prob. 40PCh. 12.11 - Prob. 41PCh. 12.11 - Prob. 42PCh. 12.11 - Prob. 43PCh. 12.11 - Prob. 44PCh. 12.12 - Prob. 46PCh. 12.12 - Prob. 47PCh. 12.12 - Prob. 48PCh. 12 - Prob. 49APCh. 12 - Prob. 50APCh. 12 - Prob. 51APCh. 12 - Prob. 52APCh. 12 - Prob. 53APCh. 12 - Prob. 54APCh. 12 - Prob. 55APCh. 12 - Prob. 57APCh. 12 - Prob. 58APCh. 12 - Prob. 59APCh. 12 - Prob. 60APCh. 12 - Prob. 61APCh. 12 - Prob. 62APCh. 12 - Prob. 63APCh. 12 - Prob. 64APCh. 12 - Prob. 65APCh. 12 - Prob. 66APCh. 12 - Prob. 67APCh. 12 - Prob. 68APCh. 12 - Prob. 69APCh. 12 - Prob. 70AP
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- Play Things is developing a new Lady Gaga doll. The company has made the following assumptions: The doll will sell for a random number of years from 1 to 10. Each of these 10 possibilities is equally likely. At the beginning of year 1, the potential market for the doll is two million. The potential market grows by an average of 4% per year. The company is 95% sure that the growth in the potential market during any year will be between 2.5% and 5.5%. It uses a normal distribution to model this. The company believes its share of the potential market during year 1 will be at worst 30%, most likely 50%, and at best 60%. It uses a triangular distribution to model this. The variable cost of producing a doll during year 1 has a triangular distribution with parameters 15, 17, and 20. The current selling price is 45. Each year, the variable cost of producing the doll will increase by an amount that is triangularly distributed with parameters 2.5%, 3%, and 3.5%. You can assume that once this change is generated, it will be the same for each year. You can also assume that the company will change its selling price by the same percentage each year. The fixed cost of developing the doll (which is incurred right away, at time 0) has a triangular distribution with parameters 5 million, 7.5 million, and 12 million. Right now there is one competitor in the market. During each year that begins with four or fewer competitors, there is a 25% chance that a new competitor will enter the market. Year t sales (for t 1) are determined as follows. Suppose that at the end of year t 1, n competitors are present (including Play Things). Then during year t, a fraction 0.9 0.1n of the company's loyal customers (last year's purchasers) will buy a doll from Play Things this year, and a fraction 0.2 0.04n of customers currently in the market ho did not purchase a doll last year will purchase a doll from Play Things this year. Adding these two provides the mean sales for this year. Then the actual sales this year is normally distributed with this mean and standard deviation equal to 7.5% of the mean. a. Use @RISK to estimate the expected NPV of this project. b. Use the percentiles in @ RISKs output to find an interval such that you are 95% certain that the companys actual NPV will be within this interval.arrow_forwardA martingale betting strategy works as follows. You begin with a certain amount of money and repeatedly play a game in which you have a 40% chance of winning any bet. In the first game, you bet 1. From then on, every time you win a bet, you bet 1 the next time. Each time you lose, you double your previous bet. Currently you have 63. Assuming you have unlimited credit, so that you can bet more money than you have, use simulation to estimate the profit or loss you will have after playing the game 50 times.arrow_forwardAn automobile manufacturer is considering whether to introduce a new model called the Racer. The profitability of the Racer depends on the following factors: The fixed cost of developing the Racer is triangularly distributed with parameters 3, 4, and 5, all in billions. Year 1 sales are normally distributed with mean 200,000 and standard deviation 50,000. Year 2 sales are normally distributed with mean equal to actual year 1 sales and standard deviation 50,000. Year 3 sales are normally distributed with mean equal to actual year 2 sales and standard deviation 50,000. The selling price in year 1 is 25,000. The year 2 selling price will be 1.05[year 1 price + 50 (% diff1)] where % diff1 is the number of percentage points by which actual year 1 sales differ from expected year 1 sales. The 1.05 factor accounts for inflation. For example, if the year 1 sales figure is 180,000, which is 10 percentage points below the expected year 1 sales, then the year 2 price will be 1.05[25,000 + 50( 10)] = 25,725. Similarly, the year 3 price will be 1.05[year 2 price + 50(% diff2)] where % diff2 is the percentage by which actual year 2 sales differ from expected year 2 sales. The variable cost in year 1 is triangularly distributed with parameters 10,000, 12,000, and 15,000, and it is assumed to increase by 5% each year. Your goal is to estimate the NPV of the new car during its first three years. Assume that the company is able to produce exactly as many cars as it can sell. Also, assume that cash flows are discounted at 10%. Simulate 1000 trials to estimate the mean and standard deviation of the NPV for the first three years of sales. Also, determine an interval such that you are 95% certain that the NPV of the Racer during its first three years of operation will be within this interval.arrow_forward
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