Why is Monte Carlo simulation necessary? Give an example of how it could be used in an actual business situation
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Why is Monte Carlo simulation necessary? Give an example of how it could be used in an actual business situation
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- Ant Co. has developed a new product, the A-Warren. It is now time to bring the A-Warren product to market. There are two alternatives for Ant-Co either market the product only in the local area, or market the product nationally. If Ant Co. rolls out the A-Warren product locally and it is successful, then the company will receive $1.4M from product sales. However, if the local rollout is unsuccessful, then the company will lose $100,000 ($0.1M) due to the costs of advertising. If Ant Co. rolls out the A-Warren product nationally and it is successful, then the company will receive $3M from product sales. However, if the national rollout is unsuccessful, then the company will lose $1M due to the costs of advertising. Historically, 40% of Ant Co.'s product rollouts have been successful. What is the most that Ant Co should pay for any information regarding the success of the A-Warren product? $0.00M $0.54M None of the answers are correct. $1.14M $0.60MPlease explain the answer alongside the steps. Thank you!Watching all these drones buzz back and forth is giving you eyestrain. But you can’t just count every single drone - how could you ever know that you had caught them all? You instead take the following approach: you build a taser-net that you can use to stun and catch drones (much more fun than just watching), before tagging them and re-releasing them into the wild. Working for a week, you manage to tag 400 drones, releasing them back into the wild. After waiting a week, you start catching drones again. Catching another 400 drones, you find that 270 of the drones you’ve caught are tagged, meaning you’d caught them before. 130 of your new catch are untagged, meaning this is the first time that you’ve caught them. Assume drones were equally likely to be caught at all times. Before catching the second batch of drones, there were 400 tagged drones in the wild, the rest were untagged. 1) After catching the second batch of drones, what is the smallest number of drones N that might be in the…
- Your Turn: The Gas Guzzler Tax is imposed on manufacturers on the sale of new-model cars (not minivans, sport utility vehicles, or pickup trucks) whose fuel economy fails to meet certain statutory regulations, to discourage the production of fuel-inefficient vehicles. The tax is collected by the IRS and paid by the manufacturer. The table (top right) shows the amount of tax that the manufacturer must pay for a vehicle's miles per gallon fuel efficiency. 12.5 13.5 MPG (M) 14.5 15.5 16.5 17.5 18.5 19.5 20.5 21.5 22.5 Tax per Car (T) $6400 $5400 $4500 $3700 $3300 $2600 $2100 $1700 $1300 $1000 $0 1. Plot the data, verify that they are roughly linear, and add a line of best fit. Line of Best Fit: 2. Identify and interpret the meaning of the slope and the vertical intercept. 3. Predict the tax for a car which gets 20 MPG. Is this interpolation or extrapolation? 4. Predict the tax for a car which gets 10 MPG. Is this interpolation or extrapolation? 5. Predict the tax for a car which gets 30…An Investec analyst is looking to invest R180,000 in hopes of getting the highest return possible. There are four investment options available: bonds, mutual funds, stocks, or a savings account yielding interest. The bonds give a 4% annual return, mutual funds give an 9% return, stocks give a 12% return, and the savings account gives a 3% return with all investments being subject to risk. To control for risk, the following constraints are put into place: a) No more than 12% of the total investment can be put into stocks. b) At most 30% must be invested in mutual funds and/or the savings account. c) The amount put in the bonds must be no more than the amount put into the other investments combined. d) The ratio of money invested in mutual funds to the amount invested in stocks and the savings account should be at least 2 to 1. e) All the R180,000 must be invested and no shorting is allowed. Formulate a linear programming model for this problem to get the highest return (i.e., Define…Hello, thank you for your return. I am an industrial engineer student and it is a necessary answer for my simulation theory course. I want from you the solution of the problem I shared as a photo.I want the solution in excel format with monte carlo model. However, I want the solution in a way that I do not need any paid plug-ins in the excel solution.Thank you from now
- Elaine Benes is considering three possible ways to invest the $200,000 she has just inherited. Some of Elaine’s friends are considering financing a combined laundromat, video-game arcade, and pizzeria, where the young singles in the area can meet and play while doing their laundry. This venture is highly risky and could result in either a major loss or a substantial gain within a year. Elaine estimates that the chances of losing all the money (i.e. loss of $200,000) are 47%, while the chances of making a $200,000 profit are 53%. Elaine can invest in some new apartments that are being built in town. Within 1 year, this fairly conservative project will produce a profit of at least $10,000, but it might yield $20,000 or even $30,000. Elaine estimates the probabilities of these yields at 20%, 50%, and 30% respectively. Elaine can invest in some private securities that have a current yield of 5%. Construct (draw) a decision tree for Elaine to determine which investment will maximize her…Although investing all at once works best when stock prices are rising, dollar-cost averaging can be a good way to take advantage of a fluctuating market. Dollar-cost averaging is an investment strategy designed to reduce volatility in which securities are purchased in fixed dollar amounts at regular intervals regardless of what direction the market is moving. This strategy is also called the constant dollar plan. You are considering a hypothetical $1,200 investment in a media company's stock. Your choice is to invest the money all at once or dollar-cost average at the rate of $100 per month for one year. Assume that the company allows you to purchase "fractional" shares of its stock. (a) If you invested all of the money in January and bought the shares for $12 each, how many shares could you buy? shares (b) From the following chart of share prices, calculate the number of shares that would be purchased each month using dollar-cost averaging and the total shares for the year.…CGI Inc. is developing a new software platform, which requires an immediate investment of $780,000 and another $260,000 in three years. Net returns expected are $450,000 after two years, $313,000 after four years, and $889,000 after six years. However, if they simply upgrade their current platform, it requires an immediate investment of $400,000, another $260,000 after two years, and $340,000 after four years. Net returns are $187,500 per year for 8 years. The rate of interest is 6.9%. Which project is preferable according to the net present value / IRR criterion?
