Case Problem Essay Example | Topics and Well Written Essays - 750 words

Case Problem - Essay ExampleSuch a business case demonstrates besides again how statistics can be used to reduce uncertainty. In particular, simulation modeling enables quantification of events and outcomes with varying probabilities. Previewing entirely possible outcomes with unknown probabilities of occurrence helps to assess potential costs and benefits. Monte Carlo simulation is one much(prenominal) procedure that applies (Doane & Seward, 2007 Stout, 2007).These parameters require the use of a uniform model, where RV values vary within a given range with no central tendency or standard deviation assumed. For the maiden abuse of estimating randomly varying demand, the result of 52 iterations of revenue simulations (see Table 1 below) yields a somewhat skewed distribution with a mean of $540 daily, a median of $542 and a standard deviation of $184. Gross yearbook revenue before simulating the effect of mechanical break obliterate would be $28,109. This is the baseline.Next, we factor in the incidence of breakdowns and the bestow time for repair. We employ the RAND function to estimate the probability that the copier will be trouble-free all told days of the week (instead of defining as 6 measure the square root of r). For the first week in the all-year iterations, therefore, the RAND value of 0.487 translates to a probability that the main copier will break down after just three days of operation. That same week, repair lead time is calculated utilise the VLOOKUP function based on the same column of RAND values. Since RAND=0.487 is lower than the 0.65 cumulative probability associated with two days repair lead time, the VLOOKUP function returns 1 day. Hence, revenue loss for the week comes to gross revenue times the proportion of 7 days that the main copier can reliably be predicted to