In Excel, use a suitable method for simulating the lost revenue for each day the copier is out of service. (See Excel spreadsheet) Put all of this together to simulate the lost revenue due to copier breakdowns over 1 year to answer the question asked in the case study. In a word processing program, write a brief description/explanation of how you implemented each component of the model. Write 1-2 paragraphs for each component of the model (days-to-repair; interval between breakdowns; lost revenue; putting it together). In this case study the students bought a copier for $1 8,000 to start their own copy business after noticing a need for it.
After purchasing the copier they found out that the one that they purchased is known to break down frequently, and was known to usually take anywhere from one to four days to repair with the time between breakdowns estimated between zero and six weeks. They estimated that they would sell between 2,000 and 8,000 copies per day at . 10 per copy. With this expected demand the students wanted to analyze whether they should purchase a back up copier for $8,000 to avoid the potential loss during breakdowns. In order to analyze this they created a simulation to estimate the amount of revenue that would be lost if they did not have a backup copier.
The sum of those variables was then in a cumulative list in column 3. In column 4 1 generated another random number to calculate the column 5 Repair time in y days. That re was used in column 5 for Repair Time in y days which was calculated by using the =VILLOUS function which related that re to probabilities in the Repair Time probability table originally set up. I then set up random number columns and result columns for repairs taking 1 day, 2 days, 3 days and 4 days. Answer the question posed in the case study. How confident are you that this answer is a good one? What are the limits of the study?
Write at least one arcograph. From this simulation I would recommend that they purchase the backup copier for $8,000. They mentioned wanting to purchase the backup if the potential loss per year was greater than or equal to $12,000. From this 52 week simulation the average lost revenue ranged from $500-2,000 and lost revenue per year varying from 1-4 repair days. The limits of this study are the assumptions made. If any of these assumptions are not accurate the results of the simulation will be skewed. References Taylor, B. M. (2010). Introduction to management science (10th deed. ). Upper Saddle River, NJ: Pearson/Prentice Hall.