Answered: Solve the following Make in-house or…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Question

Solve the following Make in-house or outsource decision model using Monte Carlo Simulation of Data Table. The production level has to be set equal to demand. Demand is assumed to follow a normal distribution of mean = 1200 and a standard deviation of 175. Make 1000 trials to simulate demand to find out the approximate probability to meet the demand through outsourcing,
Data
Manufactured in-house
Fixed cost
$50,000
Unit variable cost
$135

Purchased from supplier
Unit cost
$180

Production volume

Model

Total manufacturing cost
Total purchased cost

Cost difference
Decision (Production/ Outsourcing)

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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