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 mean absolute deviation obtained from the simulation results?

A) $10,893 B) $3,476 C) $7,443 D) $5,885 A) $10,893 B) $3,476 C) $7,443 D) $5,885

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. \(\begin{array}{|l|l|c|c|l|c|} \hline &{\text { A }} & \text { B } & \text { C } & \text { D } & \text { E } \\ \hline 1 & \text { Newsvendor Model } & & & \begin{array}{l} \text { Historical } \\ \text { Candy Sales } \end{array} &\$ 264.00 \\\hline 2 & & && 50 & \$ 264.00 \\ \hline 3 && \text { Data } & & 45 & \$ 264.00 \\ \hline 4 && & & 40 & \$ 228.00 \\ \hline 5 & \text { Sellingprice } & \$ 18.00 && 46 & \$ 264.00 \\ \hline 6 & \text { Cost } & \$ 12.00 && 43 & \$ 255.00 \\ \hline 7 & \text { Discount price } & \$ 9.00 && 43 & \$ 255.00 \\ \hline 8 & & && 46 & \$ 264.00 \\ \hline 9 & \text { Model } & && 42 & \$ 246.00 \\ \hline 10 & & && 44 & \$ 264.00 \\ \hline 11 & \text { Demand } & 44 && 43 & \$ 255.00 \\ \hline 12 & \text { Purchase Quantity } & 44 && 47 & \$ 264.00 \\ \hline 13 & & && 41 & \$ 237.00 \\ \hline 14 & \text { Quantity Sold } & && 41 & \$ 237.00 \\ \hline 15 & \text { Surplus Quantity } & && 45 & \$ 264.00 \\ \hline 16 & & && 51 & \$ 264.00 \\ \hline 17 & \text { Profit } & && 43 & \$ 255.00 \\ \hline 18 & & & & 45 & \$ 264.00 \\ \hline 19 & & & & 42 & \$ 246.00 \\ \hline 20 & & & & 44 & \$ 264.00 \\ \hline 21 & & & & 48 & \$ 264.00 \\ \hline 22 & & & \text { Average Profit } & & \\ \hline \end{array}\) -Which of the following cells is defined as the uncertain function cell?

A) B12 B) B14 C) B15 D) B17 A) B12 B) B14 C) B15 D) B17

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 standard deviation?

A) $12.50 B) $10.99 C) $15.86 D) $20.25 A) $12.50 B) $10.99 C) $15.86 D) $20.25

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 of weights 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

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 mode?

A) $228 B) $245 C) $255 D) $264 A) $228 B) $245 C) $255 D) $264

Exam 12: Monte Carlo Simulation and Risk Analysis

The Risk Solver Platform feature allows you to superimpose the frequency distributions from selected forecasts on one chart in order to compare differences and similarities that might not be apparent.

(Multiple Choice)

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Question 41

Use the information below to answer the following question(s). Consider the following spreadsheet for an outsourcing decision model. A B 1 OutsourcingDecision Model 2 3 Data 4 5 Manufactured in-house 6 Fixed cost \ 60,000 7 Unit variable cost \ 130 8 9 Purchased from supplier 10 Unit cost \ 165 11 12 Demand volume 1,000 13 14 Model 15 16 Total manufacturing cost 17 Total purchased cost 18 19 Difference 20 Decision 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 mean absolute deviation obtained from the simulation results?

(Multiple Choice)

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Question 42

Monte Carlo sampling differs from Latin Hypercube sampling in that the Monte Carlo sampling .

(Multiple Choice)

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Question 43

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. A B C D E 1 Newsvendor Model Historical Candy Sales \ 264.00 2 50 \ 264.00 3 Data 45 \ 264.00 4 40 \ 228.00 5 Sellingprice \ 18.00 46 \ 264.00 6 Cost \ 12.00 43 \ 255.00 7 Discount price \ 9.00 43 \ 255.00 8 46 \ 264.00 9 Model 42 \ 246.00 10 44 \ 264.00 11 Demand 44 43 \ 255.00 12 Purchase Quantity 44 47 \ 264.00 13 41 \ 237.00 14 Quantity Sold 41 \ 237.00 15 Surplus Quantity 45 \ 264.00 16 51 \ 264.00 17 Profit 43 \ 255.00 18 45 \ 264.00 19 42 \ 246.00 20 44 \ 264.00 21 48 \ 264.00 22 Average Profit -Which of the following cells is defined as the uncertain function cell?

(Multiple Choice)

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Question 44

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. A B C D E 1 Newsvendor Model Historical Candy Sales \ 264.00 2 50 \ 264.00 3 Data 45 \ 264.00 4 40 \ 228.00 5 Sellingprice \ 18.00 46 \ 264.00 6 Cost \ 12.00 43 \ 255.00 7 Discount price \ 9.00 43 \ 255.00 8 46 \ 264.00 9 Model 42 \ 246.00 10 44 \ 264.00 11 Demand 44 43 \ 255.00 12 Purchase Quantity 44 47 \ 264.00 13 41 \ 237.00 14 Quantity Sold 41 \ 237.00 15 Surplus Quantity 45 \ 264.00 16 51 \ 264.00 17 Profit 43 \ 255.00 18 45 \ 264.00 19 42 \ 246.00 20 44 \ 264.00 21 48 \ 264.00 22 Average Profit -What is the value of standard deviation?

(Multiple Choice)

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Question 45

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. A B C D E 1 Hotel Overbooking Model Demand Probability 2 290 0.03 3 Data 295 0.05 4 300 0.08 5 Rooms av ailable 350 305 0.12 6 Price \ 120 310 0.15 7 Overbooking cost \ 100 315 0.20 8 320 0.15 9 Model 325 0.10 10 330 0.05 11 Reserv ation limit 350 335 0.04 12 Customer demand 320 340 0.02 13 Reservations made 345 0.01 14 Cancellations 15 15 Customer arrivals 16 17 Overbooked customers 18 Net revenue 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 of weights given in the Parameters section in the Discrete dialog?

(Multiple Choice)

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Question 46

Which option in Risk Solver Platform allows you to choose the number of times that random values can be generated for the uncertain cells in the model?

(Multiple Choice)

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Question 47

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. A B C D E 1 Newsvendor Model Historical Candy Sales \ 264.00 2 50 \ 264.00 3 Data 45 \ 264.00 4 40 \ 228.00 5 Sellingprice \ 18.00 46 \ 264.00 6 Cost \ 12.00 43 \ 255.00 7 Discount price \ 9.00 43 \ 255.00 8 46 \ 264.00 9 Model 42 \ 246.00 10 44 \ 264.00 11 Demand 44 43 \ 255.00 12 Purchase Quantity 44 47 \ 264.00 13 41 \ 237.00 14 Quantity Sold 41 \ 237.00 15 Surplus Quantity 45 \ 264.00 16 51 \ 264.00 17 Profit 43 \ 255.00 18 45 \ 264.00 19 42 \ 246.00 20 44 \ 264.00 21 48 \ 264.00 22 Average Profit -What is the value of mode?

(Multiple Choice)

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Question 48

Explain the concept of the "flaw of averages."

(Essay)

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Question 49

Which of the following statements is true of a triangular distribution?

(Multiple Choice)

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Question 50

The Risk Solver Platform feature allows you to superimpose the frequency distributions from selected forecasts on one chart in order to compare differences and similarities that might not be apparent.

Monte Carlo sampling differs from Latin Hypercube sampling in that the Monte Carlo sampling .

Which option in Risk Solver Platform allows you to choose the number of times that random values can be generated for the uncertain cells in the model?

Explain the concept of the "flaw of averages."

Which of the following statements is true of a triangular distribution?

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