Use the information below to answer the following question(s). Below is a spreadsheet for Trance Electronics. \(\begin{array}{|c|l|c|c|c|c|c|} \hline &\text { A } & \text { B } & \text { C } & \text { D } & \text { E } & \text { F } \\ \hline 1&\text { Trance Electronics } & & & & & \\\hline 2 & \\ \hline 3 & \text { Data } \\ \hline 4 & \\\hline 5 & \text { Market size } & 20,000,000 \\ \hline 6 & \text { Unit (monthly Rx) revenue } & \$ 120.00 \\ \hline 7 & \text { Unit (monthly Rx) cost } & \$ 50.00 \\ \hline 8 & \text { Discount rate } & 8 \% \\ \hline 9 & & \\\hline 10 & \text { Project costs } & \\ \hline 11 & \text { R\&D } & \$ 750,000,000 \\ \hline 12 & \text { Clinical Trials } & \$ 100,000,000 \\ \hline 13 & \text { Total Project Costs } & \\ \hline 14 & & \\\hline 15 & \text { Model } & \\ \hline 16 & & \\ \hline 17 & \text { Year } & 1 &2&3&4&5\\\hline 18&\text { Market growth factor } & & 4 \% & 4 \% & 4 \% & 4 \% \\ \hline 19&\text { Market size } & & & & & \\ \hline 20&\text { Market share growth rate } & & 18 \% & 18 \% & 18 \% & 18 \% \\\hline 21 & \text { Market share } & 7 \% \\ \hline 22 & \text { Sales } & \\ \hline 23 & & \\ \hline 24 & \text { Annual revenue } & \\\hline 25 & \text { Annual costs } \\ \hline 26 & \text { Profit } \\ \hline 27 & \text { Cumulative net profit } \\ \hline 28 & \\ \hline 29 & \text { Net present value } \\ \hline \end{array}\) Suppose that the project manager of Trance Electronics has identified the following uncertain variables in the model and the distributions and parameters that describe them, as follows: Market size: normal with mean of 20,000,000 units and standard deviation of 4,000,000 units. R&D costs: uniform between $600,000,000 and $800,000,000. Clinical trial costs: lognormal with mean of $150,000,000 and standard deviation $30,000,000. Annual market growth factor: triangular with minimum = 2%, maximum = 6%, and most likely = 3%. Annual market share growth rate: triangular with minimum = 15%, maximum = 25%, and most likely = 20%. The number of trials per simulation is equal to 10,000 at a Sim. Random Seed of 2. Run the simulation and answer the following questions using the Risk Solver Platform. -What is the risk that the net present value over the 5 years will not be positive?

A) approximately 40% B) approximately 57% C) approximately 24% D) approximately 77% A) approximately 40% B) approximately 57% C) approximately 24% D) approximately 77% D

Use the information below to answer the following question(s). Below is a spreadsheet for Trance Electronics. \(\begin{array}{|c|l|c|c|c|c|c|} \hline &\text { A } & \text { B } & \text { C } & \text { D } & \text { E } & \text { F } \\ \hline 1&\text { Trance Electronics } & & & & & \\\hline 2 & \\ \hline 3 & \text { Data } \\ \hline 4 & \\\hline 5 & \text { Market size } & 20,000,000 \\ \hline 6 & \text { Unit (monthly Rx) revenue } & \$ 120.00 \\ \hline 7 & \text { Unit (monthly Rx) cost } & \$ 50.00 \\ \hline 8 & \text { Discount rate } & 8 \% \\ \hline 9 & & \\\hline 10 & \text { Project costs } & \\ \hline 11 & \text { R\&D } & \$ 750,000,000 \\ \hline 12 & \text { Clinical Trials } & \$ 100,000,000 \\ \hline 13 & \text { Total Project Costs } & \\ \hline 14 & & \\\hline 15 & \text { Model } & \\ \hline 16 & & \\ \hline 17 & \text { Year } & 1 &2&3&4&5\\\hline 18&\text { Market growth factor } & & 4 \% & 4 \% & 4 \% & 4 \% \\ \hline 19&\text { Market size } & & & & & \\ \hline 20&\text { Market share growth rate } & & 18 \% & 18 \% & 18 \% & 18 \% \\\hline 21 & \text { Market share } & 7 \% \\ \hline 22 & \text { Sales } & \\ \hline 23 & & \\ \hline 24 & \text { Annual revenue } & \\\hline 25 & \text { Annual costs } \\ \hline 26 & \text { Profit } \\ \hline 27 & \text { Cumulative net profit } \\ \hline 28 & \\ \hline 29 & \text { Net present value } \\ \hline \end{array}\) Suppose that the project manager of Trance Electronics has identified the following uncertain variables in the model and the distributions and parameters that describe them, as follows: Market size: normal with mean of 20,000,000 units and standard deviation of 4,000,000 units. R&D costs: uniform between $600,000,000 and $800,000,000. Clinical trial costs: lognormal with mean of $150,000,000 and standard deviation $30,000,000. Annual market growth factor: triangular with minimum = 2%, maximum = 6%, and most likely = 3%. Annual market share growth rate: triangular with minimum = 15%, maximum = 25%, and most likely = 20%. The number of trials per simulation is equal to 10,000 at a Sim. Random Seed of 2. Run the simulation and answer the following questions using the Risk Solver Platform. -What are the chances that the product will show a cumulative net profit in the fourth year?

A) approximately 25% B) approximately 18% C) approximately 11% D) approximately 32% A) approximately 25% B) approximately 18% C) approximately 11% D) approximately 32% C

Use the information below to answer the following question(s). Consider the following spreadsheet for an outsourcing decision model. $\begin{array}{|l|c|c|} \hline & \text { A } & \text { B } \\ \hline 1 & \text { OutsourcingDecision Model } & \\ \hline 2 & & \\\hline 3 & \text { Data } & \\ \hline 4 & & \\ \hline 5 & \text { Manufactured in-house } & \\ \hline 6 & \text { Fixed cost } & \$ 60,000 \\ \hline 7 & \text { Unit variable cost } & \$ 130 \\\hline 8 & & \\ \hline 9 & \text { Purchased from supplier } & \\ \hline 10 & \text { Unit cost } & \$ 165 \\ \hline 11 & & \\ \hline 12 & \text { Demand volume } & 1,000 \\\hline 13 & \\ \hline 14 & \text { Model } \\ \hline 15 & \\ \hline 16 & \text { Total manufacturing cost } \\ \hline 17 & \text { Total purchased cost } \\ \hline 18 & \\ \hline 19 & \text { Difference } \\ \hline 20 & \text { Decision } \\ \hline \end{array}$ We assume that the production (demand) volume is normally distributed with a mean of 1,000 and a standard deviation of 100. For the unit cost, select the triangular distribution. It has a minimum value of $150, most likely value of $165, and a maximum value of $190. The number of trials per simulation is equal to 5,000 at a Sim. Random Seed of 1. Run the simulation and answer the following question(s) using the Risk Solver Platform. -What is the cost difference upper cutoff in thousands of dollars if the likelihood is 75%?

A) approximately 46 B) approximately 28 C) approximately 32 D) approximately 59 A) approximately 46 B) approximately 28 C) approximately 32 D) approximately 59

Use the information below to answer the following question(s). Consider the following spreadsheet for an outsourcing decision model. $\begin{array}{|l|c|c|} \hline & \text { A } & \text { B } \\ \hline 1 & \text { OutsourcingDecision Model } & \\ \hline 2 & & \\\hline 3 & \text { Data } & \\ \hline 4 & & \\ \hline 5 & \text { Manufactured in-house } & \\ \hline 6 & \text { Fixed cost } & \$ 60,000 \\ \hline 7 & \text { Unit variable cost } & \$ 130 \\\hline 8 & & \\ \hline 9 & \text { Purchased from supplier } & \\ \hline 10 & \text { Unit cost } & \$ 165 \\ \hline 11 & & \\ \hline 12 & \text { Demand volume } & 1,000 \\\hline 13 & \\ \hline 14 & \text { Model } \\ \hline 15 & \\ \hline 16 & \text { Total manufacturing cost } \\ \hline 17 & \text { Total purchased cost } \\ \hline 18 & \\ \hline 19 & \text { Difference } \\ \hline 20 & \text { Decision } \\ \hline \end{array}$ We assume that the production (demand) volume is normally distributed with a mean of 1,000 and a standard deviation of 100. For the unit cost, select the triangular distribution. It has a minimum value of $150, most likely value of $165, and a maximum value of $190. The number of trials per simulation is equal to 5,000 at a Sim. Random Seed of 1. Run the simulation and answer the following question(s) using the Risk Solver Platform. -What is the value of standard deviation obtained from the simulation results?

A) $9,175 B) $7,884 C) $3,860 D) $12,870 A) $9,175 B) $7,884 C) $3,860 D) $12,870

Use the information below to answer the following question(s). Below is a spreadsheet for Trance Electronics. \(\begin{array}{|c|l|c|c|c|c|c|} \hline &\text { A } & \text { B } & \text { C } & \text { D } & \text { E } & \text { F } \\ \hline 1&\text { Trance Electronics } & & & & & \\\hline 2 & \\ \hline 3 & \text { Data } \\ \hline 4 & \\\hline 5 & \text { Market size } & 20,000,000 \\ \hline 6 & \text { Unit (monthly Rx) revenue } & \$ 120.00 \\ \hline 7 & \text { Unit (monthly Rx) cost } & \$ 50.00 \\ \hline 8 & \text { Discount rate } & 8 \% \\ \hline 9 & & \\\hline 10 & \text { Project costs } & \\ \hline 11 & \text { R\&D } & \$ 750,000,000 \\ \hline 12 & \text { Clinical Trials } & \$ 100,000,000 \\ \hline 13 & \text { Total Project Costs } & \\ \hline 14 & & \\\hline 15 & \text { Model } & \\ \hline 16 & & \\ \hline 17 & \text { Year } & 1 &2&3&4&5\\\hline 18&\text { Market growth factor } & & 4 \% & 4 \% & 4 \% & 4 \% \\ \hline 19&\text { Market size } & & & & & \\ \hline 20&\text { Market share growth rate } & & 18 \% & 18 \% & 18 \% & 18 \% \\\hline 21 & \text { Market share } & 7 \% \\ \hline 22 & \text { Sales } & \\ \hline 23 & & \\ \hline 24 & \text { Annual revenue } & \\\hline 25 & \text { Annual costs } \\ \hline 26 & \text { Profit } \\ \hline 27 & \text { Cumulative net profit } \\ \hline 28 & \\ \hline 29 & \text { Net present value } \\ \hline \end{array}\) Suppose that the project manager of Trance Electronics has identified the following uncertain variables in the model and the distributions and parameters that describe them, as follows: Market size: normal with mean of 20,000,000 units and standard deviation of 4,000,000 units. R&D costs: uniform between $600,000,000 and $800,000,000. Clinical trial costs: lognormal with mean of $150,000,000 and standard deviation $30,000,000. Annual market growth factor: triangular with minimum = 2%, maximum = 6%, and most likely = 3%. Annual market share growth rate: triangular with minimum = 15%, maximum = 25%, and most likely = 20%. The number of trials per simulation is equal to 10,000 at a Sim. Random Seed of 2. Run the simulation and answer the following questions using the Risk Solver Platform. -What is the coefficient of variation obtained from the simulation results of the net present value?

A) 1.78392 B) -2.23958 C) -1.36659 D) 2.87645 A) 1.78392 B) -2.23958 C) -1.36659 D) 2.87645

Use the information below to answer the following question(s). Below is a spreadsheet for Trance Electronics. \(\begin{array}{|c|l|c|c|c|c|c|} \hline &\text { A } & \text { B } & \text { C } & \text { D } & \text { E } & \text { F } \\ \hline 1&\text { Trance Electronics } & & & & & \\\hline 2 & \\ \hline 3 & \text { Data } \\ \hline 4 & \\\hline 5 & \text { Market size } & 20,000,000 \\ \hline 6 & \text { Unit (monthly Rx) revenue } & \$ 120.00 \\ \hline 7 & \text { Unit (monthly Rx) cost } & \$ 50.00 \\ \hline 8 & \text { Discount rate } & 8 \% \\ \hline 9 & & \\\hline 10 & \text { Project costs } & \\ \hline 11 & \text { R\&D } & \$ 750,000,000 \\ \hline 12 & \text { Clinical Trials } & \$ 100,000,000 \\ \hline 13 & \text { Total Project Costs } & \\ \hline 14 & & \\\hline 15 & \text { Model } & \\ \hline 16 & & \\ \hline 17 & \text { Year } & 1 &2&3&4&5\\\hline 18&\text { Market growth factor } & & 4 \% & 4 \% & 4 \% & 4 \% \\ \hline 19&\text { Market size } & & & & & \\ \hline 20&\text { Market share growth rate } & & 18 \% & 18 \% & 18 \% & 18 \% \\\hline 21 & \text { Market share } & 7 \% \\ \hline 22 & \text { Sales } & \\ \hline 23 & & \\ \hline 24 & \text { Annual revenue } & \\\hline 25 & \text { Annual costs } \\ \hline 26 & \text { Profit } \\ \hline 27 & \text { Cumulative net profit } \\ \hline 28 & \\ \hline 29 & \text { Net present value } \\ \hline \end{array}\) Suppose that the project manager of Trance Electronics has identified the following uncertain variables in the model and the distributions and parameters that describe them, as follows: Market size: normal with mean of 20,000,000 units and standard deviation of 4,000,000 units. R&D costs: uniform between $600,000,000 and $800,000,000. Clinical trial costs: lognormal with mean of $150,000,000 and standard deviation $30,000,000. Annual market growth factor: triangular with minimum = 2%, maximum = 6%, and most likely = 3%. Annual market share growth rate: triangular with minimum = 15%, maximum = 25%, and most likely = 20%. The number of trials per simulation is equal to 10,000 at a Sim. Random Seed of 2. Run the simulation and answer the following questions using the Risk Solver Platform. -What is the correlation of the market size with the NPV with reference to the sensitivity chart?

A) 0.043 B) 0.888 C) -0.341 D) -0.026 A) 0.043 B) 0.888 C) -0.341 D) -0.026

Conduct Monte Carlo simulation using historical data and resampling techniques. Use the information below to answer the following question(s). Below is a spreadsheet for a hotel overbooking model. $\begin{array}{|c|c|c|c|l|l|} \hline & \text { A } & \text { B } & \text { C } &{\text { D }} & \text { E } \\ \hline 1 & \text { Hotel Overbooking Model } & & & \text { Demand } & \text { Probability } \\ \hline 2 & & & & 290 & 0.03 \\\hline 3 & \text { Data } & & & 295 & 0.05 \\ \hline 4 & & && 300 & 0.08 \\ \hline 5 & \text { Rooms av ailable } & 350 && 305 & 0.12 \\\hline 6 & \text { Price } & \$ 120 & & 310 & 0.15 \\ \hline 7 & \text { Overbooking cost } & \$ 100 && 315 & 0.20 \\ \hline 8 && & & 320 & 0.15 \\\hline 9 & \text { Model } & & & 325 & 0.10 \\ \hline 10 & & & & 330 & 0.05 \\\hline 11 & \text { Reserv ation limit } & 350 && 335 & 0.04 \\ \hline 12 & \text { Customer demand } & 320 && 340 & 0.02 \\ \hline 13 & \text { Reservations made } & & &345 & 0.01 \\\hline 14 & \text { Cancellations } & 15 \\ \hline 15 & \text { Customer arrivals } & \\ \hline 16 & & \\ \hline 17 & \text { Overbooked customers } & \\ \hline 18 & \text { Net revenue } & \\ \hline \end{array}$ Assume that each reservation has a constant probability p = 0.04 of being cancelled. Answer the question(s) using the Risk Solver Platform. -With respect to B12, what is the range for values given in the Parameters section in the Discrete dialog?

A) $E$2:$E$13 B) $D$2:$D$8 C) $D$2:$D$13 D) $E$2:$E$8 A) $E$2:$E$13 B) $D$2:$D$8 C) $D$2:$D$13 D) $E$2:$E$8

Use the information below to answer the following question(s). Below is a spreadsheet for Trance Electronics. \(\begin{array}{|c|l|c|c|c|c|c|} \hline &\text { A } & \text { B } & \text { C } & \text { D } & \text { E } & \text { F } \\ \hline 1&\text { Trance Electronics } & & & & & \\\hline 2 & \\ \hline 3 & \text { Data } \\ \hline 4 & \\\hline 5 & \text { Market size } & 20,000,000 \\ \hline 6 & \text { Unit (monthly Rx) revenue } & \$ 120.00 \\ \hline 7 & \text { Unit (monthly Rx) cost } & \$ 50.00 \\ \hline 8 & \text { Discount rate } & 8 \% \\ \hline 9 & & \\\hline 10 & \text { Project costs } & \\ \hline 11 & \text { R\&D } & \$ 750,000,000 \\ \hline 12 & \text { Clinical Trials } & \$ 100,000,000 \\ \hline 13 & \text { Total Project Costs } & \\ \hline 14 & & \\\hline 15 & \text { Model } & \\ \hline 16 & & \\ \hline 17 & \text { Year } & 1 &2&3&4&5\\\hline 18&\text { Market growth factor } & & 4 \% & 4 \% & 4 \% & 4 \% \\ \hline 19&\text { Market size } & & & & & \\ \hline 20&\text { Market share growth rate } & & 18 \% & 18 \% & 18 \% & 18 \% \\\hline 21 & \text { Market share } & 7 \% \\ \hline 22 & \text { Sales } & \\ \hline 23 & & \\ \hline 24 & \text { Annual revenue } & \\\hline 25 & \text { Annual costs } \\ \hline 26 & \text { Profit } \\ \hline 27 & \text { Cumulative net profit } \\ \hline 28 & \\ \hline 29 & \text { Net present value } \\ \hline \end{array}\) Suppose that the project manager of Trance Electronics has identified the following uncertain variables in the model and the distributions and parameters that describe them, as follows: Market size: normal with mean of 20,000,000 units and standard deviation of 4,000,000 units. R&D costs: uniform between $600,000,000 and $800,000,000. Clinical trial costs: lognormal with mean of $150,000,000 and standard deviation $30,000,000. Annual market growth factor: triangular with minimum = 2%, maximum = 6%, and most likely = 3%. Annual market share growth rate: triangular with minimum = 15%, maximum = 25%, and most likely = 20%. The number of trials per simulation is equal to 10,000 at a Sim. Random Seed of 2. Run the simulation and answer the following questions using the Risk Solver Platform. -What is the standard deviation obtained from the simulation results of the net present value? [Hint: Choose the approximate value.]

A) $204,868,924 B) $162,135,408 C) $182,992,245 D) $138,134,040 A) $204,868,924 B) $162,135,408 C) $182,992,245 D) $138,134,040

Answer the following question(s) using the Risk Solver Platform (5000 trials per simulation; use the Latin Hypercube sampling method). Consider the spreadsheet for a Newsvendor Model. \(\begin{array}{|l|l|c|c|l|c|} \hline &{\text { A }} & \text { B } & \text { C } & \text { D } & \text { E } \\ \hline 1 & \text { Newsvendor Model } & & & \begin{array}{l} \text { Historical } \\ \text { Candy Sales } \end{array} &\$ 264.00 \\\hline 2 & & && 50 & \$ 264.00 \\ \hline 3 && \text { Data } & & 45 & \$ 264.00 \\ \hline 4 && & & 40 & \$ 228.00 \\ \hline 5 & \text { Sellingprice } & \$ 18.00 && 46 & \$ 264.00 \\ \hline 6 & \text { Cost } & \$ 12.00 && 43 & \$ 255.00 \\ \hline 7 & \text { Discount price } & \$ 9.00 && 43 & \$ 255.00 \\ \hline 8 & & && 46 & \$ 264.00 \\ \hline 9 & \text { Model } & && 42 & \$ 246.00 \\ \hline 10 & & && 44 & \$ 264.00 \\ \hline 11 & \text { Demand } & 44 && 43 & \$ 255.00 \\ \hline 12 & \text { Purchase Quantity } & 44 && 47 & \$ 264.00 \\ \hline 13 & & && 41 & \$ 237.00 \\ \hline 14 & \text { Quantity Sold } & && 41 & \$ 237.00 \\ \hline 15 & \text { Surplus Quantity } & && 45 & \$ 264.00 \\ \hline 16 & & && 51 & \$ 264.00 \\ \hline 17 & \text { Profit } & && 43 & \$ 255.00 \\ \hline 18 & & & & 45 & \$ 264.00 \\ \hline 19 & & & & 42 & \$ 246.00 \\ \hline 20 & & & & 44 & \$ 264.00 \\ \hline 21 & & & & 48 & \$ 264.00 \\ \hline 22 & & & \text { Average Profit } & & \\ \hline \end{array}\) -What is the purchase quantity lower cutoff if the likelihood is 75%?

A) 264 B) 255 C) 246 D) 228 A) 264 B) 255 C) 246 D) 228

Use the information below to answer the following question(s). Consider the following spreadsheet for an outsourcing decision model. $\begin{array}{|l|c|c|} \hline & \text { A } & \text { B } \\ \hline 1 & \text { OutsourcingDecision Model } & \\ \hline 2 & & \\\hline 3 & \text { Data } & \\ \hline 4 & & \\ \hline 5 & \text { Manufactured in-house } & \\ \hline 6 & \text { Fixed cost } & \$ 60,000 \\ \hline 7 & \text { Unit variable cost } & \$ 130 \\\hline 8 & & \\ \hline 9 & \text { Purchased from supplier } & \\ \hline 10 & \text { Unit cost } & \$ 165 \\ \hline 11 & & \\ \hline 12 & \text { Demand volume } & 1,000 \\\hline 13 & \\ \hline 14 & \text { Model } \\ \hline 15 & \\ \hline 16 & \text { Total manufacturing cost } \\ \hline 17 & \text { Total purchased cost } \\ \hline 18 & \\ \hline 19 & \text { Difference } \\ \hline 20 & \text { Decision } \\ \hline \end{array}$ We assume that the production (demand) volume is normally distributed with a mean of 1,000 and a standard deviation of 100. For the unit cost, select the triangular distribution. It has a minimum value of $150, most likely value of $165, and a maximum value of $190. The number of trials per simulation is equal to 5,000 at a Sim. Random Seed of 1. Run the simulation and answer the following question(s) using the Risk Solver Platform. -What is the value of mode obtained from the simulation results?

A) $28,435 B) $22,485 C) $27,198 D) $25,394 A) $28,435 B) $22,485 C) $27,198 D) $25,394

Use the information below to answer the following question(s). Below is a spreadsheet for Trance Electronics. \(\begin{array}{|c|l|c|c|c|c|c|} \hline &\text { A } & \text { B } & \text { C } & \text { D } & \text { E } & \text { F } \\ \hline 1&\text { Trance Electronics } & & & & & \\\hline 2 & \\ \hline 3 & \text { Data } \\ \hline 4 & \\\hline 5 & \text { Market size } & 20,000,000 \\ \hline 6 & \text { Unit (monthly Rx) revenue } & \$ 120.00 \\ \hline 7 & \text { Unit (monthly Rx) cost } & \$ 50.00 \\ \hline 8 & \text { Discount rate } & 8 \% \\ \hline 9 & & \\\hline 10 & \text { Project costs } & \\ \hline 11 & \text { R\&D } & \$ 750,000,000 \\ \hline 12 & \text { Clinical Trials } & \$ 100,000,000 \\ \hline 13 & \text { Total Project Costs } & \\ \hline 14 & & \\\hline 15 & \text { Model } & \\ \hline 16 & & \\ \hline 17 & \text { Year } & 1 &2&3&4&5\\\hline 18&\text { Market growth factor } & & 4 \% & 4 \% & 4 \% & 4 \% \\ \hline 19&\text { Market size } & & & & & \\ \hline 20&\text { Market share growth rate } & & 18 \% & 18 \% & 18 \% & 18 \% \\\hline 21 & \text { Market share } & 7 \% \\ \hline 22 & \text { Sales } & \\ \hline 23 & & \\ \hline 24 & \text { Annual revenue } & \\\hline 25 & \text { Annual costs } \\ \hline 26 & \text { Profit } \\ \hline 27 & \text { Cumulative net profit } \\ \hline 28 & \\ \hline 29 & \text { Net present value } \\ \hline \end{array}\) Suppose that the project manager of Trance Electronics has identified the following uncertain variables in the model and the distributions and parameters that describe them, as follows: Market size: normal with mean of 20,000,000 units and standard deviation of 4,000,000 units. R&D costs: uniform between $600,000,000 and $800,000,000. Clinical trial costs: lognormal with mean of $150,000,000 and standard deviation $30,000,000. Annual market growth factor: triangular with minimum = 2%, maximum = 6%, and most likely = 3%. Annual market share growth rate: triangular with minimum = 15%, maximum = 25%, and most likely = 20%. The number of trials per simulation is equal to 10,000 at a Sim. Random Seed of 2. Run the simulation and answer the following questions using the Risk Solver Platform. -What is the correlation of the R&D cost with the NPV with reference to the sensitivity chart?

A) -0.404 B) 0.028 C) 0.908 D) -0.194 A) -0.404 B) 0.028 C) 0.908 D) -0.194

Use the information below to answer the following question(s). Below is a spreadsheet for Trance Electronics. \(\begin{array}{|c|l|c|c|c|c|c|} \hline &\text { A } & \text { B } & \text { C } & \text { D } & \text { E } & \text { F } \\ \hline 1&\text { Trance Electronics } & & & & & \\\hline 2 & \\ \hline 3 & \text { Data } \\ \hline 4 & \\\hline 5 & \text { Market size } & 20,000,000 \\ \hline 6 & \text { Unit (monthly Rx) revenue } & \$ 120.00 \\ \hline 7 & \text { Unit (monthly Rx) cost } & \$ 50.00 \\ \hline 8 & \text { Discount rate } & 8 \% \\ \hline 9 & & \\\hline 10 & \text { Project costs } & \\ \hline 11 & \text { R\&D } & \$ 750,000,000 \\ \hline 12 & \text { Clinical Trials } & \$ 100,000,000 \\ \hline 13 & \text { Total Project Costs } & \\ \hline 14 & & \\\hline 15 & \text { Model } & \\ \hline 16 & & \\ \hline 17 & \text { Year } & 1 &2&3&4&5\\\hline 18&\text { Market growth factor } & & 4 \% & 4 \% & 4 \% & 4 \% \\ \hline 19&\text { Market size } & & & & & \\ \hline 20&\text { Market share growth rate } & & 18 \% & 18 \% & 18 \% & 18 \% \\\hline 21 & \text { Market share } & 7 \% \\ \hline 22 & \text { Sales } & \\ \hline 23 & & \\ \hline 24 & \text { Annual revenue } & \\\hline 25 & \text { Annual costs } \\ \hline 26 & \text { Profit } \\ \hline 27 & \text { Cumulative net profit } \\ \hline 28 & \\ \hline 29 & \text { Net present value } \\ \hline \end{array}\) Suppose that the project manager of Trance Electronics has identified the following uncertain variables in the model and the distributions and parameters that describe them, as follows: Market size: normal with mean of 20,000,000 units and standard deviation of 4,000,000 units. R&D costs: uniform between $600,000,000 and $800,000,000. Clinical trial costs: lognormal with mean of $150,000,000 and standard deviation $30,000,000. Annual market growth factor: triangular with minimum = 2%, maximum = 6%, and most likely = 3%. Annual market share growth rate: triangular with minimum = 15%, maximum = 25%, and most likely = 20%. The number of trials per simulation is equal to 10,000 at a Sim. Random Seed of 2. Run the simulation and answer the following questions using the Risk Solver Platform. -What is the expected loss ratio obtained from the simulation results of the net present value?

A) 93.50% B) 72.45% C) 67.32% D) 86.32% A) 93.50% B) 72.45% C) 67.32% D) 86.32%

Answer the following question(s) using the Risk Solver Platform (5000 trials per simulation; use the Latin Hypercube sampling method). Consider the spreadsheet for a Newsvendor Model. \(\begin{array}{|l|l|c|c|l|c|} \hline &{\text { A }} & \text { B } & \text { C } & \text { D } & \text { E } \\ \hline 1 & \text { Newsvendor Model } & & & \begin{array}{l} \text { Historical } \\ \text { Candy Sales } \end{array} &\$ 264.00 \\\hline 2 & & && 50 & \$ 264.00 \\ \hline 3 && \text { Data } & & 45 & \$ 264.00 \\ \hline 4 && & & 40 & \$ 228.00 \\ \hline 5 & \text { Sellingprice } & \$ 18.00 && 46 & \$ 264.00 \\ \hline 6 & \text { Cost } & \$ 12.00 && 43 & \$ 255.00 \\ \hline 7 & \text { Discount price } & \$ 9.00 && 43 & \$ 255.00 \\ \hline 8 & & && 46 & \$ 264.00 \\ \hline 9 & \text { Model } & && 42 & \$ 246.00 \\ \hline 10 & & && 44 & \$ 264.00 \\ \hline 11 & \text { Demand } & 44 && 43 & \$ 255.00 \\ \hline 12 & \text { Purchase Quantity } & 44 && 47 & \$ 264.00 \\ \hline 13 & & && 41 & \$ 237.00 \\ \hline 14 & \text { Quantity Sold } & && 41 & \$ 237.00 \\ \hline 15 & \text { Surplus Quantity } & && 45 & \$ 264.00 \\ \hline 16 & & && 51 & \$ 264.00 \\ \hline 17 & \text { Profit } & && 43 & \$ 255.00 \\ \hline 18 & & & & 45 & \$ 264.00 \\ \hline 19 & & & & 42 & \$ 246.00 \\ \hline 20 & & & & 44 & \$ 264.00 \\ \hline 21 & & & & 48 & \$ 264.00 \\ \hline 22 & & & \text { Average Profit } & & \\ \hline \end{array}\) -What is the value of mean absolute deviation?

A) $8.91 B) $5.45 C) $12.35 D) $15.64 A) $8.91 B) $5.45 C) $12.35 D) $15.64

Conduct Monte Carlo simulation using historical data and resampling techniques. Use the information below to answer the following question(s). Below is a spreadsheet for a hotel overbooking model. $\begin{array}{|c|c|c|c|l|l|} \hline & \text { A } & \text { B } & \text { C } &{\text { D }} & \text { E } \\ \hline 1 & \text { Hotel Overbooking Model } & & & \text { Demand } & \text { Probability } \\ \hline 2 & & & & 290 & 0.03 \\\hline 3 & \text { Data } & & & 295 & 0.05 \\ \hline 4 & & && 300 & 0.08 \\ \hline 5 & \text { Rooms av ailable } & 350 && 305 & 0.12 \\\hline 6 & \text { Price } & \$ 120 & & 310 & 0.15 \\ \hline 7 & \text { Overbooking cost } & \$ 100 && 315 & 0.20 \\ \hline 8 && & & 320 & 0.15 \\\hline 9 & \text { Model } & & & 325 & 0.10 \\ \hline 10 & & & & 330 & 0.05 \\\hline 11 & \text { Reserv ation limit } & 350 && 335 & 0.04 \\ \hline 12 & \text { Customer demand } & 320 && 340 & 0.02 \\ \hline 13 & \text { Reservations made } & & &345 & 0.01 \\\hline 14 & \text { Cancellations } & 15 \\ \hline 15 & \text { Customer arrivals } & \\ \hline 16 & & \\ \hline 17 & \text { Overbooked customers } & \\ \hline 18 & \text { Net revenue } & \\ \hline \end{array}$ Assume that each reservation has a constant probability p = 0.04 of being cancelled. Answer the question(s) using the Risk Solver Platform. -With respect to B14, what should the number of trials correspond to in the Parameters section of the Binomial dialog?

A) reservation limit B) customer demand C) reservations made D) customer arrivals A) reservation limit B) customer demand C) reservations made D) customer arrivals