Use the information below to answer the following question(s). Consider the following spreadsheet for an outsourcing decision model. \[\begin{array} { | l | l | l | } \hline 1 & \ { \text { A } } & \text { B } \\ \hline 2 & \text { Outsourcing Decision Model } & \\ \hline 3 & \text { Data } & \\ \hline 4 & & \\ \hline 5 & \text { Manufactured in-house } & \\ \hline 6 & \text { Fixed cost } & \$ 60,000 \\ \hline 7 & \text { Unit variable cost } & \$ 130 \\ \hline 8 & & \\ \hline 9 & \text { Purchased from supplier } & \\ \hline 10 & \text { Unit cost } & \$ 180 \\ \hline 11 & & \\ \hline 12 & \text { Demand volume } & \$ 1,600 \\ \hline 13 & & \\ \hline 14 & \text { Model } & \\ \hline 15 & & \\ \hline 16 & \text { Total manufacturing cost } & \\ \hline 17 & \text { Total purchased cost } & \\ \hline 18 & & \\ \hline 19 & \text { Difference } & \\ \hline 20 & \text { Decision } & \\ \hline \end{array}\] 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 expected loss determined from the simulation results?

A) $(78) B) $(120) C) $(60) D) $(39) A) $(78) B) $(120) C) $(60) D) $(39)

Use the information below to answer the following question(s). Consider the following spreadsheet for an outsourcing decision model. \[\begin{array} { | l | l | l | } \hline 1 & \ { \text { A } } & \text { B } \\ \hline 2 & \text { Outsourcing Decision Model } & \\ \hline 3 & \text { Data } & \\ \hline 4 & & \\ \hline 5 & \text { Manufactured in-house } & \\ \hline 6 & \text { Fixed cost } & \$ 60,000 \\ \hline 7 & \text { Unit variable cost } & \$ 130 \\ \hline 8 & & \\ \hline 9 & \text { Purchased from supplier } & \\ \hline 10 & \text { Unit cost } & \$ 180 \\ \hline 11 & & \\ \hline 12 & \text { Demand volume } & \$ 1,600 \\ \hline 13 & & \\ \hline 14 & \text { Model } & \\ \hline 15 & & \\ \hline 16 & \text { Total manufacturing cost } & \\ \hline 17 & \text { Total purchased cost } & \\ \hline 18 & & \\ \hline 19 & \text { Difference } & \\ \hline 20 & \text { Decision } & \\ \hline \end{array}\] 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 obtained from the simulation results? [Hint: Choose the nearest answer]

A) $18,385 B) $21,663 C) $14,894 D) $23,946 A) $18,385 B) $21,663 C) $14,894 D) $23,946

Use the information below to answer the following question(s). Consider the following spreadsheet for an outsourcing decision model. \[\begin{array} { | l | l | l | } \hline 1 & \ { \text { A } } & \text { B } \\ \hline 2 & \text { Outsourcing Decision Model } & \\ \hline 3 & \text { Data } & \\ \hline 4 & & \\ \hline 5 & \text { Manufactured in-house } & \\ \hline 6 & \text { Fixed cost } & \$ 60,000 \\ \hline 7 & \text { Unit variable cost } & \$ 130 \\ \hline 8 & & \\ \hline 9 & \text { Purchased from supplier } & \\ \hline 10 & \text { Unit cost } & \$ 180 \\ \hline 11 & & \\ \hline 12 & \text { Demand volume } & \$ 1,600 \\ \hline 13 & & \\ \hline 14 & \text { Model } & \\ \hline 15 & & \\ \hline 16 & \text { Total manufacturing cost } & \\ \hline 17 & \text { Total purchased cost } & \\ \hline 18 & & \\ \hline 19 & \text { Difference } & \\ \hline 20 & \text { Decision } & \\ \hline \end{array}\] 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 lower cutoff if the likelihood is 60%?

A) approximately 13.63 B) approximately 22.45 C) approximately 29.67 D) approximately 38.97 A) approximately 13.63 B) approximately 22.45 C) approximately 29.67 D) approximately 38.97

Use the information below to answer the following question(s). Consider the following spreadsheet for an outsourcing decision model. \[\begin{array} { | l | l | l | } \hline 1 & \ { \text { A } } & \text { B } \\ \hline 2 & \text { Outsourcing Decision Model } & \\ \hline 3 & \text { Data } & \\ \hline 4 & & \\ \hline 5 & \text { Manufactured in-house } & \\ \hline 6 & \text { Fixed cost } & \$ 60,000 \\ \hline 7 & \text { Unit variable cost } & \$ 130 \\ \hline 8 & & \\ \hline 9 & \text { Purchased from supplier } & \\ \hline 10 & \text { Unit cost } & \$ 180 \\ \hline 11 & & \\ \hline 12 & \text { Demand volume } & \$ 1,600 \\ \hline 13 & & \\ \hline 14 & \text { Model } & \\ \hline 15 & & \\ \hline 16 & \text { Total manufacturing cost } & \\ \hline 17 & \text { Total purchased cost } & \\ \hline 18 & & \\ \hline 19 & \text { Difference } & \\ \hline 20 & \text { Decision } & \\ \hline \end{array}\] 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) $9,135 B) $7,884 C) $3,860 D) $12,870 A) $9,135 B) $7,884 C) $3,860 D) $12,870

Exam 11: Simulation and Risk Analysis

Use the information below to answer the following question(s). Consider the following spreadsheet for an outsourcing decision model. 1 \ A B 2 Outsourcing Decision Model 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 \ 180 11 12 Demand volume \ 1,600 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 expected loss determined from the simulation results?

(Multiple Choice)

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Question 21

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

(Multiple Choice)

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Question 22

The Risk Solver Platform ________ feature allows you to determine the influence that each uncertain model input has individually on an output variable based on its correlation with the output variable.

(Multiple Choice)

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Question 23

Why is the ROUND function used in Excel?

(Multiple Choice)

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Question 24

What are the benefits of a Risk Solver Platform sensitivity chart?

(Essay)

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Question 25

What is Monte Carlo simulation?

(Essay)

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Question 26

Monte Carlo simulation is an inappropriate tool to analyze cash budgets because of the inherent uncertainty of the sales forecasts on which most cash budgets are based.

(True/False)

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Question 27

Use the information below to answer the following question(s). Below is a spreadsheet for a hotel overbooking model. 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?

(Multiple Choice)

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Question 28

Answer the following question(s)using the Risk Solver Platform (5000 trials per simulation). Consider the spreadsheet for a Newsvendor Model. -What is the value of mode?

(Multiple Choice)

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Question 29

Use the information below to answer the following question(s). Below is a spreadsheet for Trance Electronics. 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: : normal with mean of 2,000,000 units and standard deviation of 400,000 units. : uniform between $600,000,000 and $800,000,000. : lognormal with mean of $150,000,000 and standard deviation $30,000,000. : triangular with minimum = 2%, maximum = 6%, and most likely = 3%. : 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?

(Multiple Choice)

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Question 30

Use the information below to answer the following question(s). Consider the following spreadsheet for an outsourcing decision model. 1 \ A B 2 Outsourcing Decision Model 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 \ 180 11 12 Demand volume \ 1,600 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 obtained from the simulation results? [Hint: Choose the nearest answer]

(Multiple Choice)

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Question 31

Use the information below to answer the following question(s). Consider the following spreadsheet for an outsourcing decision model. 1 \ A B 2 Outsourcing Decision Model 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 \ 180 11 12 Demand volume \ 1,600 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 cost difference lower cutoff if the likelihood is 60%?

(Multiple Choice)

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Question 32

Use the information below to answer the following question(s). Below is a spreadsheet for Trance Electronics. 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: : normal with mean of 2,000,000 units and standard deviation of 400,000 units. : uniform between $600,000,000 and $800,000,000. : lognormal with mean of $150,000,000 and standard deviation $30,000,000. : triangular with minimum = 2%, maximum = 6%, and most likely = 3%. : 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?

(Multiple Choice)

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Question 33

Use the information below to answer the following question(s). Consider the following spreadsheet for an outsourcing decision model. 1 \ A B 2 Outsourcing Decision Model 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 \ 180 11 12 Demand volume \ 1,600 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 standard deviation obtained from the simulation results?

(Multiple Choice)

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Question 34

Which of the following is a parameter in the Normal Distribution Dialog of the Risk Solver Platform?

(Multiple Choice)

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Question 35

Answer the following question(s)using the Risk Solver Platform (5000 trials per simulation). Consider the spreadsheet for a Newsvendor Model. -What is the value of mean absolute deviation?

(Multiple Choice)

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Question 36

Explain the concept of the "flaw of averages."

(Essay)

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Question 37

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 38

Use the information below to answer the following question(s). Below is a spreadsheet for Trance Electronics. 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: : normal with mean of 2,000,000 units and standard deviation of 400,000 units. : uniform between $600,000,000 and $800,000,000. : lognormal with mean of $150,000,000 and standard deviation $30,000,000. : triangular with minimum = 2%, maximum = 6%, and most likely = 3%. : 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 value margin obtained from the simulation results of the net present value?

(Multiple Choice)

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Question 39

Use the information below to answer the following question(s). Below is a spreadsheet for a hotel overbooking model. 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?

(Multiple Choice)

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(35)

Question 40

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

The Risk Solver Platform ________ feature allows you to determine the influence that each uncertain model input has individually on an output variable based on its correlation with the output variable.

Why is the ROUND function used in Excel?

What are the benefits of a Risk Solver Platform sensitivity chart?

What is Monte Carlo simulation?

Monte Carlo simulation is an inappropriate tool to analyze cash budgets because of the inherent uncertainty of the sales forecasts on which most cash budgets are based.

Answer the following question(s)using the Risk Solver Platform (5000 trials per simulation). Consider the spreadsheet for a Newsvendor Model. -What is the value of mode?

Which of the following is a parameter in the Normal Distribution Dialog of the Risk Solver Platform?

Answer the following question(s)using the Risk Solver Platform (5000 trials per simulation). Consider the spreadsheet for a Newsvendor Model. -What is the value of mean absolute deviation?

Explain the concept of the "flaw of averages."

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.

Introduction to Business Analytics

Analytics on Spreadsheets

Visualizing and Exploring Data

Descriptive Statistical Measures

Probability Distributions and Data Modeling

Sampling and Estimation

Statistical Inference

Predictive Modeling and Analysis

Regression Analysis

Forecasting Techniques

Introduction to Data Mining

Linear Optimization

Applications of Linear Optimization

Integer Optimization

Nonlinear and Non-Smooth Optimization

Optimization Models with Uncertainty

Decision Analysis

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