Engineering Economy (17th Edition)
17th Edition
ISBN: 9780134870069
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
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Chapter 12, Problem 26SE
To determine
Calculate the variance.
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The management of Brinkley Corporation is interested in using simulation to estimate the profit per unit for a new product. The selling price for the product will be $45 per unit. Probability distributions for the purchase cost, the labor cost, and the transportation cost
are estimated as follows:
Procurement
Cost($)
10
$
11
12
Probability
0.25
0.45
0.30
Labor
Cost ($)
20
22
24
25
Probability
0.10
0.25
0.35
0.30
Transportation
Cost ($)
3
5
(a) Compute profit per unit for the base-case, worst-case, and best-case scenarios.
Base Case using most likely costs
Profit = $
/unit
Worst Case
Profit = $
/unit
Best Case
Profit = $
/unit
Probability
0.75
0.25
(b) Construct a simulation model to estimate the mean profit per unit. (Use at least 1,000 trials.)
(c) Why is the simulation approach to risk analysis preferable to generating a variety of what-if scenarios?
Simulation will provide ---Select---
of the profit per unit values which can then be used to find ---Select--- ◆ of an unacceptably low…
Data in the matrix below indicates COST expected from 3 alternatives under 4 states of nature. Determine
which alternative is dominant using With and Without Probability (use a = 0.3 and probability of: 30%;
20%; 40% & 10% for S1, S2, S3, and 54 respectively): Which alternative is best using Expected Value?
Alternatives
S1
53
S4
A1
10
18
15
A2
12
25
20
A3
15
19
25
S2
20
15
18
One-hundred and forty (140) travelers begin in city A and must travel to city B.
There are several routes between A and B.
Route I starts with a local street from A to C that takes x/10 hours, where x is number of
travelers on the AC edge, and then is followed by a highway from city C to city B, which requires
8 hours regardless of the number of travelers on it.
Route II begins with a highway from city A to city D which requires 4 hours regardless of the
number of travelers on it and ends with a local street from city D to city B which requires y/20
hours, where y is the number of travelers on the DB edge.
All roads above are one-way roads. There is also a two-way road between cities C and D that
requires 8 hours of travel time in either direction regardless of the number of travelers going in
either direction on it. Each traveler can use any of the routes ACB, ADB, ACDB and ADCB.
Travelers simultaneously choose which route to use.
Find Nash equilibrium values of x, y and number of…
Chapter 12 Solutions
Engineering Economy (17th Edition)
Ch. 12 - Prob. 1PCh. 12 - Prob. 2PCh. 12 - A new snow making machine utilizes technology that...Ch. 12 - Prob. 4PCh. 12 - Prob. 5PCh. 12 - Prob. 6PCh. 12 - Prob. 7PCh. 12 - Prob. 8PCh. 12 - Prob. 9PCh. 12 - Prob. 10P
Ch. 12 - Prob. 11PCh. 12 - Prob. 12PCh. 12 - Prob. 13PCh. 12 - Prob. 14PCh. 12 - Prob. 15PCh. 12 - Prob. 16PCh. 12 - Prob. 17PCh. 12 - Prob. 18PCh. 12 - Prob. 19PCh. 12 - Prob. 20PCh. 12 - Prob. 21PCh. 12 - Prob. 22PCh. 12 - If the interest rate is 8% per year, what decision...Ch. 12 - Prob. 24PCh. 12 - Prob. 25PCh. 12 - Prob. 26SE
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