John Long was standing in line next to Sara Thomas at Cox’s Copy Center, waiting to use one of the copy machines. “Gee, Sara , I hate this,” he said. “We have to drive all the way over here from Southgate and then wait in line to use these copy machines.
I hate wasting time like this.”“I know what you mean,” said Sara. “And look who’s here. A lot of these students are from Windbrook Apartments or one of the other apartments near us. It seems as though it would be more logical if Cox’s would move its operation over to us, instead of all of us coming over here.”John looked around and noticed what Sara was talking about. Sara and he were students at State University, and most of the customers at Cox’s were also students. As Sara suggested, a lot of the people waiting were State students who lived at Windbrook Apartments, where John also lived with Mike smith. This gave John an idea, which he shared with Mike and their friend Teresa Mann when he got home later that evening.
“Look, you guys, I’ve got an idea to make some money,” John started. “Let’s open a copy business! All we have to do is buy a copier, put it in Teresa’s duplex next door, and sell copies. I know we can get customers because I’ve just seen them all at cox’s.
If we provide a copy service right here in the Windbrook complex, we’ll make a killing.”
Teresa and mike liked the idea, so the three decided to go into the copying business. They would call it Roww Copies, named for John, mike, and Teresa. Their first step was to purchase a copier. They bought one like the one used in the college of business office
at State for $18,000. (Teresa’s parents provided a loan.) The company that sold them the copier touted the copier’s reliability, but after they bought it, mike talked with someone in the dean’s office at State, who told him that the University’s copier broke down frequently and when it did, it often took between 1 and 4 days to get it repaired. When mike told this to Teresa and John, they became worried. If the copier broke down frequently and was not in use for long periods while they waited for a repair person to come fix it, they could lose a lot of revenue. As a result, John, mike, and
teresa thought they might need to purchase a smaller backup copier for $8,000 to use when the main copier broke down. However, before they approached Teresa’parents for another loan, they wanted to have an estimate of just how much money they
might lose if they did not have a backup copier. To get this estimate, they decided to develop a simulation model because they were studying simulation in one of their classes at State .To develop a simulation model, they first needed to know how frequently the copier might break down—specifically, the time between breakdowns. No one could provide them with an exact probability distribution, but from talking to staff members in the college of business, John estimated that the time between breakdowns
was probably between 0 and 6 weeks, with the probability increasing the longer the copier went without breaking down. Thus, the probability distribution of breakdowns generally looked like the following: Next, they needed to know how long it would take to get the copier repaired when it broke down. They had a service contract
with the dealer that “guaranteed” prompt repair service. However, Teresa gathered some data from the college of business from which she developed the following probability distribution of repair times:
Repair Time (days) Probability
1 .20
2 .45
3 .25
4 .10
1.00
Finally, they needed to estimate how much business they would lose while the copier was waiting for repair. The three of them had only a vague idea of how much business they would do but finally estimated that they would sell between 2,000 and 8,000 copies per day at $0.10 per copy. However, they had no idea about what kind of probability distribution to use for this range of values. Therefore, they decided to use a uniform probability distribution between 2,000 and 8,000 copies to estimate the number of copies they would sell per day. John, mike, and Terresa decided that if their loss of revenue due to machine downtime during 1 year was $12,000 or more, they should purchase a backup copier. Thus, they needed to simulate the breakdown and repair process for a number of years to obtain an average annual loss of revenue. However, before programming the simulation model, they decided to conduct a manual simulation of this process for
1 year to see if the model was working correctly. Perform this manual simulation for Roww Copies and determine the loss of revenue for 1 year.
Using simulation estimate the loss of revenue due to copier breakdown for one year, as follows:

  1. In Excel, use a suitable method for generating the number of days needed to repair the copier, when it is out of service, according to the discrete distribution shown.
  2. In Excel, use a suitable method for simulating the interval between successive breakdowns, according to the continuous distribution shown.
  3. In Excel, use a suitable method for simulating the lost revenue for each day the copier is out of service.
  4. 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.
  5. 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).
  6. 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 paragraph.

There are two deliverables for this Case Problem, the Excel spreadsheet and the written description/explanation.

John Long was standing in line next to Sara Thomas at Cox’s Copy Center, waiting to use one of the copy machines. “Gee, Sara , I hate this,” he said. “We have to drive all the way over here from Southgate and then wait in line to use these copy machines.

I hate wasting time like this.”“I know what you mean,” said Sara. “And look who’s here. A lot of these students are from Windbrook Apartments or one of the other apartments near us. It seems as though it would be more logical if Cox’s would move its operation over to us, instead of all of us coming over here.”John looked around and noticed what Sara was talking about. Sara and he were students at State University, and most of the customers at Cox’s were also students. As Sara suggested, a lot of the people waiting were State students who lived at Windbrook Apartments, where John also lived with Mike smith. This gave John an idea, which he shared with Mike and their friend Teresa Mann when he got home later that evening.

“Look, you guys, I’ve got an idea to make some money,” John started. “Let’s open a copy business! All we have to do is buy a copier, put it in Teresa’s duplex next door, and sell copies. I know we can get customers because I’ve just seen them all at cox’s.

If we provide a copy service right here in the Windbrook complex, we’ll make a killing.”

Teresa and mike liked the idea, so the three decided to go into the copying business. They would call it Roww Copies, named for John, mike, and Teresa. Their first step was to purchase a copier. They bought one like the one used in the college of business office

at State for $18,000. (Teresa’s parents provided a loan.) The company that sold them the copier touted the copier’s reliability, but after they bought it, mike talked with someone in the dean’s office at State, who told him that the University’s copier broke down frequently and when it did, it often took between 1 and 4 days to get it repaired. When mike told this to Teresa and John, they became worried. If the copier broke down frequently and was not in use for long periods while they waited for a repair person to come fix it, they could lose a lot of revenue. As a result, John, mike, and

teresa thought they might need to purchase a smaller backup copier for $8,000 to use when the main copier broke down. However, before they approached Teresa’s parents for another loan, they wanted to have an estimate of just how much money they

might lose if they did not have a backup copier. To get this estimate, they decided to develop a simulation model because they were studying simulation in one of their classes at State .To develop a simulation model, they first needed to know how frequently the copier might break down—specifically, the time between breakdowns. No one could provide them with an exact probability distribution, but from talking to staff members in the college of business, John estimated that the time between breakdowns

was probably between 0 and 6 weeks, with the probability increasing the longer the copier went without breaking down. Thus, the probability distribution of breakdowns generally looked like the following: Next, they needed to know how long it would take to get the copier repaired when it broke down. They had a service contract

with the dealer that “guaranteed” prompt repair service. However, Teresa gathered some data from the college of business from which she developed the following probability distribution of repair times:

 

 

Repair Time (days)              Probability

1                                              .20

2                                              .45

3                                              .25

4                                              .10

1.00

 

Finally, they needed to estimate how much business they would lose while the copier was waiting for repair. The three of them had only a vague idea of how much business they would do but finally estimated that they would sell between 2,000 and 8,000 copies per day at $0.10 per copy. However, they had no idea about what kind of probability distribution to use for this range of values. Therefore, they decided to use a uniform probability distribution between 2,000 and 8,000 copies to estimate the number of copies they would sell per day. John, mike, and Terresa decided that if their loss of revenue due to machine downtime during 1 year was $12,000 or more, they should purchase a backup copier. Thus, they needed to simulate the breakdown and repair process for a number of years to obtain an average annual loss of revenue. However, before programming the simulation model, they decided to conduct a manual simulation of this process for

1 year to see if the model was working correctly. Perform this manual simulation for Roww Copies and determine the loss of revenue for 1 year.

 

 

 

Using simulation estimate the loss of revenue due to copier breakdown for one year, as follows:

  1. In Excel, use a suitable method for generating the number of days needed to repair the copier, when it is out of service, according to the discrete distribution shown.
  2. In Excel, use a suitable method for simulating the interval between successive breakdowns, according to the continuous distribution shown.
  3. In Excel, use a suitable method for simulating the lost revenue for each day the copier is out of service.
  4. 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.
  5. 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).
  6. 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 paragraph.

 

There are two deliverables for this Case Problem, the Excel spreadsheet and the written description/explanation. 

 


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