An electric vehicle company is debating whether to replace its original model, Model X, with a new model, Model Y, which would appeal to a younger audience. Whatever vehicle is chosen, it will be produced for the next four years, after which time a reevaluation will be necessary. Develop a four-year Monte Carlo simulation model using 5050 trials to recommend the best decision using a net present value discount rate of 44%. Click here to view the descriptions of the two models. LOADING... Click here to view a sample of 50 simulation trial results. LOADING... Question content area bottom Part 1 Set up a spreadsheet model and calculate the difference in the net present values in thousands of dollars (NPV) for producing Model X or producing Model Y using the means for uncertain values with normal distributions and the most likely values for uncertain values with triangular distributions. NPV(Model Y)minus−NPV(Model X)equals=$enter your response here thousand (Round to the nearest thousand dollars as needed.) Trial Difference1 -6941552 -1000053 -2562044 -7797445 -4121596 -2126347 -15666628 -11879959 -29537310 -16557311 -38645512 -139887313 -35295414 -76275915 -34802216 -10179617 65876418 -93792619 -99519720 -78368421 -3630722 4542823 -129038924 -88009725 -5642026 500227 -134142028 -20278729 -36563530 -40404931 -122990132 -75056733 13281934 -15241735 -121418236 36893337 -12224738 32134339 57625240 -93867941 -95664742 -62103843 -67080044 -70695945 41308846 -100443447 25756848 -42566549 -64478650 -983028

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter11: Simulation Models

Section: Chapter Questions

Problem 52P

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Question content area bottom

Part 1

Set up a spreadsheet model and calculate the difference in the net present values in thousands of dollars (NPV) for producing Model X or producing Model Y using the means for uncertain values with normal distributions and the most likely values for uncertain values with triangular distributions.

NPV(Model

Y)minus−NPV(Model

X)equals=$enter your response here

thousand

(Round to the nearest thousand dollars as needed.)

Trial Difference
1 -694155
2 -100005
3 -256204
4 -779744
5 -412159
6 -212634
7 -1566662
8 -1187995
9 -295373
10 -165573
11 -386455
12 -1398873
13 -352954
14 -762759
15 -348022
16 -101796
17 658764
18 -937926
19 -995197
20 -783684
21 -36307
22 45428
23 -1290389
24 -880097
25 -56420
26 5002
27 -1341420
28 -202787
29 -365635
30 -404049
31 -1229901
32 -750567
33 132819
34 -152417
35 -1214182
36 368933
37 -122247
38 321343
39 576252
40 -938679
41 -956647
42 -621038
43 -670800
44 -706959
45 413088
46 -1004434
47 257568
48 -425665
49 -644786
50 -983028

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

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