Engineering Economy
16th Edition
ISBN: 9780133582819
Author: Sullivan
Publisher: DGTL BNCOM
expand_more
expand_more
format_list_bulleted
Question
Chapter 12, Problem 26SE
To determine
Calculate the variance.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
WHICH OPTION IS CORRECT?
The management of Brinkley Corporation is interested in using simulation to estimate the profit per unit for a new product. The selling price for the product will be $45 per unit. Probability distributions for the purchase cost, the labor cost, and the transportation cost
are estimated as follows:
Procurement
Cost($)
10
$
11
12
Probability
0.25
0.45
0.30
Labor
Cost ($)
20
22
24
25
Probability
0.10
0.25
0.35
0.30
Transportation
Cost ($)
3
5
(a) Compute profit per unit for the base-case, worst-case, and best-case scenarios.
Base Case using most likely costs
Profit = $
/unit
Worst Case
Profit = $
/unit
Best Case
Profit = $
/unit
Probability
0.75
0.25
(b) Construct a simulation model to estimate the mean profit per unit. (Use at least 1,000 trials.)
(c) Why is the simulation approach to risk analysis preferable to generating a variety of what-if scenarios?
Simulation will provide ---Select---
of the profit per unit values which can then be used to find ---Select--- ◆ of an unacceptably low…
Data in the matrix below indicates COST expected from 3 alternatives under 4 states of nature. Determine
which alternative is dominant using With and Without Probability (use a = 0.3 and probability of: 30%;
20%; 40% & 10% for S1, S2, S3, and 54 respectively): Which alternative is best using Expected Value?
Alternatives
S1
53
S4
A1
10
18
15
A2
12
25
20
A3
15
19
25
S2
20
15
18
Chapter 12 Solutions
Engineering Economy
Ch. 12 - Prob. 1PCh. 12 - Prob. 2PCh. 12 - A new snow making machine utilizes technology that...Ch. 12 - Prob. 4PCh. 12 - Prob. 5PCh. 12 - Prob. 6PCh. 12 - Prob. 7PCh. 12 - Prob. 8PCh. 12 - Prob. 9PCh. 12 - Prob. 10P
Ch. 12 - Prob. 11PCh. 12 - Prob. 12PCh. 12 - Prob. 13PCh. 12 - Prob. 14PCh. 12 - Prob. 15PCh. 12 - Prob. 16PCh. 12 - Prob. 17PCh. 12 - Prob. 18PCh. 12 - Prob. 19PCh. 12 - Prob. 20PCh. 12 - Prob. 21PCh. 12 - Prob. 22PCh. 12 - If the interest rate is 8% per year, what decision...Ch. 12 - Prob. 24PCh. 12 - Prob. 25PCh. 12 - Prob. 26SE
Knowledge Booster
Similar questions
- One-hundred and forty (140) travelers begin in city A and must travel to city B. There are several routes between A and B. Route I starts with a local street from A to C that takes x/10 hours, where x is number of travelers on the AC edge, and then is followed by a highway from city C to city B, which requires 8 hours regardless of the number of travelers on it. Route II begins with a highway from city A to city D which requires 4 hours regardless of the number of travelers on it and ends with a local street from city D to city B which requires y/20 hours, where y is the number of travelers on the DB edge. All roads above are one-way roads. There is also a two-way road between cities C and D that requires 8 hours of travel time in either direction regardless of the number of travelers going in either direction on it. Each traveler can use any of the routes ACB, ADB, ACDB and ADCB. Travelers simultaneously choose which route to use. Find Nash equilibrium values of x, y and number of…arrow_forwardMother E, a business selling specialized helmet, has a carrying cost of P70 per unit per order. In order to satisfy the customers coming from various places, they order every 4 months. The stockout cost is P50 per unit per year. The following are the demand for specialized helmet Demand during lead time Probability 50 .1 60 .2 70 .2 80 .2 90 .1 The reorder point is 70 units. What level of safety stock should be maintained?arrow_forwardOnly typed answerarrow_forward
- In preparing for the upcoming holiday season, Fresh Toy Company (FTC) designed a new doll called The Dougie that teaches children how to dance. The fixed cost to produce the doll is $100,000. The variable cost, which includes material, labor, and shipping costs, is $34 per doll. During the holiday selling season, FTC will sell the dolls for $42 each. If FTC overproduces the dolls, the excess dolls will be sold in January through a distributor who has agreed to pay FTC $10 per doll. Demand for new toys during the holiday selling season is extremely uncertain. Forecasts are for expected sales of 60,000 dolls with a standard deviation of 15,000. The normal probability distribution is assumed to be a good description of the demand. FTC has tentatively decided to produce 60,000 units (the same as average demand), but it wants to conduct an analysis regarding this production quantity before finalizing the decision. (a) Create a what-if spreadsheet model using a formula that relates the…arrow_forwardPat James, the purchasing agent for a local plant of the Oakden Electronics Division, was considering the possible purchase of a component from a new supplier. The component’s purchase price, $0.90, compared favorably with the standard price of $1.10. Given the quantity that would be purchased, Pat knew that the favorable price variance would help to offset an unfavorable variance for another component. By offsetting the unfavorable variance, his overall performance report would be impressive and good enough to help him qualify for the annual bonus. More importantly, a good performance rating this year would help him to secure a position at division headquarters at a significant salary increase. Purchase of the part, however, presented Pat with a dilemma. Consistent with his past behavior, Pat made inquiries regarding the reliability of the new supplier and the part’s quality. Reports were basically negative. The supplier had a reputation for making the first two or three deliveries on…arrow_forwardI see some mistakes on solve equations for x2. Please review so is a grade-3 polinomic equation: 0,08/(x2)2 + 12x2 = 15.000 Confirm, Thanksarrow_forward
- Please solve quicklyarrow_forwardSt. John's Brewery (SJB) is getting ready for a busy tourist season. SJB wants to either increase production or produce the same amount as last year, depending on the demand level for the coming season. SJB estimates the probabilities for high, medium and low demands as 0.32, 0.31, and 0.37 respectively, on the basis of the number of tourists forecasted by the local recreational bureau. If SJB increases production, the expected profits corresponding to high, medium and low demands are $800,000, $400,000 and $100,000 respectively. If SJB does not increase production, the expected profits are $550,000, $325,000 and $200,000 respectively. (NOTE: Text answers are case sensitive and the value of different parts of this question is indicated in square brackets [*/*]) Construct a decision tree for SJB. On the basis of the EV, what should SJB do? What is the expected value of increasing production? What is the expected value of not increasing production? Should SJB increase production (enter…arrow_forwardData in the matrix below indicates COST expected from 3 alternatives under 4 states of nature. Determine which alternative is dominant using With and Without Probability Use every methodarrow_forward
- only a,b,c,or d option no explanation Three applicants are to be selected at random out of 4 boys and 6 girls. What is the probability of selecting, at least one girl? Answer Answer Option a) 0.5 b) 0.15 d) 0.366 c) 0.636arrow_forwardA factory manager is planning for the manufacture of plywood to be sold overseas. The fixed cost of operation is estimated at $800,000 per month while the variable cost is $155 per thousand board feet of plywood. The selling price will depend on how much will be produced and sold and is determined by the relationship, price per thousand board feet, p = $600 – 0.05D, where D is the amount produced and sold in thousands of board feet. Determine the range of profitable production. For profitable production, production must be at least thousands of board feet per month, but not more than (Round to the nearest unit.)arrow_forwardYour firm is considering which of two devices to install to reduce costs and has asked you to perform the economic analysis. Both devices have useful lives of 5 years. Device A costs $21,000, is expected to result in $7,500 savings annually, and has a salvage value of $2.000. Device B costs $19,000 and has a salvage value of $1,000. Device B will provide savings of $7,000 in the first year; however, savings will increase by $750 annually, making the second- year savings $7,750, the third-year savings $8,500, and so forth. With interest at 5%, based on equivalent uniform annual worth, which device should you recommend to your firm?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education