Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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Chapter 11, Problem 52P
a)
Summary Introduction
To estimate: The fraction of all refrigerators that have to be replaced.
Introduction: Simulation model is the digital prototype of the physical model that helps to
b)
Summary Introduction
To estimate: The replacement cost that would be saved.
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.
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Appliances Unlimited (AU) sells refrigerators. Anyrefrigerator that fails before it is three years old isreplaced for free. Of all refrigerators, 3% fail duringtheir first year of operation; 5% of all one-year-oldrefrigerators fail during their second year of operation;and 7% of all two-year-old refrigerators fail duringtheir third year of operation.a. Use simulation to estimate the fraction of all refrigeratorsthat will have to be replaced.b. It costs $500 to replace a refrigerator, and AU sells10,000 refrigerators per year. If the warranty periodwere reduced to two years, how much per year inreplacement costs would be saved?
Chapter 11 Solutions
Practical Management Science
Ch. 11.2 - If the number of competitors in Example 11.1...Ch. 11.2 - In Example 11.1, the possible profits vary from...Ch. 11.2 - Referring to Example 11.1, if the average bid for...Ch. 11.2 - See how sensitive the results in Example 11.2 are...Ch. 11.2 - In Example 11.2, the gamma distribution was used...Ch. 11.2 - Prob. 6PCh. 11.2 - In Example 11.3, suppose you want to run five...Ch. 11.2 - In Example 11.3, if a batch fails to pass...Ch. 11.3 - Rerun the new car simulation from Example 11.4,...Ch. 11.3 - Rerun the new car simulation from Example 11.4,...
Ch. 11.3 - In the cash balance model from Example 11.5, the...Ch. 11.3 - Prob. 12PCh. 11.3 - Prob. 13PCh. 11.3 - The simulation output from Example 11.6 indicates...Ch. 11.3 - Prob. 15PCh. 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 - Prob. 18PCh. 11.3 - Prob. 19PCh. 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 - Prob. 25PCh. 11.3 - Prob. 26PCh. 11.3 - Prob. 27PCh. 11.3 - Prob. 28PCh. 11.4 - Prob. 29PCh. 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 - Prob. 33PCh. 11.4 - Suppose that GLC earns a 2000 profit each time a...Ch. 11.4 - Prob. 35PCh. 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 - Prob. 42PCh. 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 - Prob. 47PCh. 11 - Based on Marcus (1990). The Balboa mutual fund has...Ch. 11 - Prob. 50PCh. 11 - Prob. 52PCh. 11 - The annual demand for Prizdol, a prescription drug...Ch. 11 - Prob. 54PCh. 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 - Prob. 65PCh. 11 - Rework the previous problem for a case in which...Ch. 11 - Prob. 68PCh. 11 - The Tinkan Company produces one-pound cans for the...Ch. 11 - Prob. 70PCh. 11 - In this version of dice blackjack, you toss a...Ch. 11 - Prob. 76PCh. 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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- The game of Chuck-a-Luck is played as follows: You pick a number between 1 and 6 and toss three dice. If your number does not appear, you lose 1. If your number appears x times, you win x. On the average, use simulation to find the average amount of money you will win or lose on each play of the game.arrow_forwardQ) The FDA is responsible for meat and poultry, but if a food product has less than 3% of meat, then the USDA is responsible for it. Select one: True False solve it early with explanationarrow_forwardMultiple Choice As the discount rate increases, the present value of a positive cash flow to be received at a particular time in the future: gets closer to zero gets larger without limit stays unchanged gets smaller without limitarrow_forward
- Assume that a customer shops at a local grocery store spending an average of $250 a week, resulting in the retailer earning a $40 profit each week from this customer. Assuming the shopper visits the store all 52 weeks of the year, calculate the customer lifetime value if this shopper remains loyal over a 10-year life-span. Also assume a 6 percent annual interest rate and no initial cost to acquire the customer. Part 2 This customer yields __ per year in profits for this retailer. (Round to the nearest dollar.) Part 3 The customer lifetime is __arrow_forwardA producer of pocket calculators estimates that the calculators fail at a rate of oneevery five years. The calculators are sold for $25 each with a one-year freereplacement warranty but can be purchased from an unregistered mail-ordersource for $18.50 without the warranty. Is it worth purchasing the calculator withthe warranty?arrow_forwardA firm's most recent financial statements often serve as the basis for predicting future sales, costs, and expenses. True or False True False dtv 28arrow_forward
- Which of the following statements is true ? 1.Average values generated from a simulation are generally more accurate than expected values computed from a probability distribution 2.Simulated results will differ from expected values more for long simulations than for short simulations 3.Simulation can reproduce the behaviour of a system over several periods . 4.A random number is assigned to each value of the random variablearrow_forwardDetermine the explanation for the simulation's effects to vary from run to run.arrow_forwardAn information will be having predictive value if it can assist to: a. Predict the past b. Predict the present c. Predict the environment d. Predict the futurarrow_forward
- See how sensitive the results in Example 11.2 are to the following changes. For each part, make the change indicated, run the simulation, and comment on any differences between your outputs and the outputs in the example. a. The cost of a new camera is increased to $500. b. The warranty period is decreased to one year. c. The terms of the warranty are changed. If the cam- era fails within one year, the customer gets a new camera for free. However, if the camera fails between 1 year and 1.5 years, the customer pays a pro rata share of the new camera, increasing linearly from 0 to full price. For example, if it fails at 1.2 years, which is 40% of the way from 1 to 1.5, the customer pays 40% of the full price. d. The customer pays $50 up front for an extended warranty. This extends the warranty to three years. This extended warranty is just like the original, so that if the camera fails within three years, the customer gets a new camera for free.arrow_forwardChoose the best answer choice to identify the benefit(s) of simulation. a. Simulation can lead to greater comprehension of the behavior of a real-world system. b. Simuulation can permit compression of years of hit-or miss experimenting with a business process into just a few short moments of computer time. c. Simulaation can help us answer ‘what-if’ questions. d. Simulattion can allow us to explore the implications of uncertainty in processes. e. All of the above (i.e., a, b, c, and d are potential advantages of simulation.).arrow_forwardA mortgage can be terminated by novation. Select one: True Falsearrow_forward
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