Order ID:89JHGSJE83839 | Style:APA/MLA/Harvard/Chicago | Pages:5-10 |
Instructions:
HELP WITH RISK SOFTWARE DECISION MODELING
The Mojave Manufacturing Company (MMC) is thinking of launching a new product. They would like you to conduct a risk analysis of the scenario before making a decision to determine whether introducing the new product is a good idea for the company. The fixed cost of starting manufacturing on the new product is $32,000 per year. The product’s variable cost is evenly divided between $15 and $25 per unit. The product will be sold at a cost of $50 per unit. A normal distribution with a mean of 1300 units and a standard deviation of 375 units best describes annual demand for the commodity. (Assume they manufacture the precise number of units needed to meet annual demand.)
a. Create a @RISK simulation model and run 1,000 iterations with it.
b. What is the predicted annual profit based on your simulation results?
c. What is the probability of losing money on this new product, based on the simulation results?
d. Do you think MMC should launch this new product? Use the simulation output data to back up your judgment.
g. For a 95 percent confidence level, how many iterations would you need to estimate expected annual profit for this new product within $50?
Cuban Investors buys, develops, and resells real estate for a profit. Mark Cuban, the president and owner of Cuban Investors, believes that a new property can be sold for $160,000. The present owner of the property requested bids and announced that the property will be sold for the highest bidder who offered more than $100,000. For the property, two competitors will submit bids. Cuban has no idea what the competitors will bid, but for the sake of planning, he believes that each competitor’s bid will be evenly split between $100,000 and $150,000. Cuban is considering making an offer for the property that ranges from $120000 to $150000 (in $5000 increments). He has enlisted your assistance in determining the “correct” amount to bid on the property in order to maximize his anticipated profit.
a. Assume Cuban decides to bid $120000 in the auction. To answer parts b, c, and d, create a simulation model that corresponds to the above scenario and run it for 5000 iterations.
c. What is the likelihood that Cuban will be able to obtain the home with a bid of $120,000, based on your simulation model?
c. For your likelihood estimate from component b, please offer a 95% confidence interval.
d. How much profit can you expect from an offer of $120,000?
a. Rerun your simulation model with bid amounts of $125000, $130,000, $135,000, $140,000, $145,000, and $150,000 (5000 iterations each time). You have the option of running each simulation separately or using risksimtable, as mentioned in the live session. Which bid amount value would you recommend to Mark Cuban based on these simulations in order to maximize his predicted profit?
RUBRIC |
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Excellent Quality 95-100%
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Introduction
45-41 points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned. |
Literature Support 91-84 points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned. |
Methodology 58-53 points Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met. |
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Average Score 50-85% |
40-38 points More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided. |
83-76 points Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration. |
52-49 points Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met. |
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Poor Quality 0-45% |
37-1 points The background and/or significance are missing. No search history information is provided. |
75-1 points Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration. |
48-1 points There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met |
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HELP WITH RISK SOFTWARE DECISION MODELING |
HELP WITH RISK SOFTWARE DECISION MODELING