Exam 10: Introduction to Simulation Modeling

If x is a random number between 0 and 1,then we can use x to simulate a variable that is uniformly distributed between 100 and 200 using the formula:

Exhibit 10-1 A company is in the planning phase of constructing a new production facility. It wants to build a simulation model for the economics of the facility, and one key uncertain input is the construction cost. For each of the scenarios in the questions below, choose an "appropriate" distribution, together with its parameters, and explain your choice. -Refer to Exhibit 10-1.Engineering also believes the construction time will be from 5 to 9 months.However,they believe that 7 months is twice as likely as either 6 months or 8 months and that either of these latter possibilities is three times as likely as either 5 months or 9 months.

Discrete distributions are sometimes used in place of continuous distributions:

A common guideline for constructing a 95% confidence interval is to place upper and lower bounds one standard error on either side of the mean.

A distribution for modeling the time it takes to serve a customer at a bank is probably:

Exhibit 10-2 A large apparel company wants to determine the profitability of one of its most popular products, a particular type of jacket. Demand is uncertain, due to economic conditions, competition, weather and other factors, and the following probability distributions have been estimated for each of the company's three regions: -Refer to Exhibit 10-2.Total sales is a product of three different types of input distributions.What does the output distribution look like What is the standard deviation of the total sales What are the 5th and 95th percentiles of this distribution

The RAND()function in excel models which of the following probability distributions

Exhibit 10-1 A company is in the planning phase of constructing a new production facility. It wants to build a simulation model for the economics of the facility, and one key uncertain input is the construction cost. For each of the scenarios in the questions below, choose an "appropriate" distribution, together with its parameters, and explain your choice. -Refer to Exhibit 10-1.Management believes the facility construction time will be somewhere from 5 to 9 months.They believe the probabilities of the extremes (5 and 9 months)are both 10%,and the probabilities will vary linearly from those endpoints to a most likely value at 7 months.

Exhibit 10-1 A company is in the planning phase of constructing a new production facility. It wants to build a simulation model for the economics of the facility, and one key uncertain input is the construction cost. For each of the scenarios in the questions below, choose an "appropriate" distribution, together with its parameters, and explain your choice. -Refer to Exhibit 10-1.A little later on,management still believes the upper and lower bounds for the costs are $5M and $8M,but now they can also state that "we believe the most likely value is about $6.5M."

When the value of a decision variable has been optimized by running several simulations,attitude toward risk should no longer be relevant.