August
1997 QUESTION 3 Total Marks: 20 Marks |
Click here to access other
questions
Click to access |
| 3. | (a) Discuss the effectiveness of simulation as a business tool. | [5] | ||||||||||||||||
| (b) A retailer has placed in order for 25 units of a certain item to be delivered daily.The estimated sales for each day are expected to follow the probability distribution given below: | ||||||||||||||||||
|
||||||||||||||||||
| You are also provided with the following information: | ||||||||||||||||||
| each unit cost $20 and is sold for $26 | ||||||||||||||||||
| There is a loss of goodwill of $6 per unit (this is the loss suffered if there is no stock to satisfy a particular customer) | ||||||||||||||||||
| the retailer does not have any storage facilities so that any units remaining unsold at the end of the day are thrown away. | ||||||||||||||||||
| (i) What do the probability values listed above indicate? | [2] | |||||||||||||||||
| (ii) Explain how pseudo-random numbers can be assigned to each level of demand, and complete the assignment of pseudo-random numbers to the table given above. | [5] | |||||||||||||||||
| (iii) Given the stream of random digits 65065834589678832548, simulate demand for this business over a ten-day period. | [3] | |||||||||||||||||
| (c) Use your simulation to deduce whether the business is likely to be profitable. | [5] | |||||||||||||||||