The questions are in red on the Excel sheet.
Monthly Demand (Number of New sign customer sign ups) Percentage of a time demand level occurs
In addition to the historical demand, the company knows that the selling price per customer is a random value between $50 and 80$.
The selling price is due to the different packages ordered by diffeent customers. The random value of the selling price has been traditionally determined
within sun dish by a discrete uniform distribution.
The monthly demand data shown is an average of the demand from the first six months after the new service is introduced
The data about the percentage of time a specific demand level occurs is based on historical data over a number of observations
The simulated monthly demand multiplied by the simulated selling price gives the montly revenue.
Normally the company runs 200 replications in simulation models such as this one. The 200 replications are used to determine the average revenue and the
standard deviation of revenue that is expected from a new service offering.
It is important to note that in real life situations, it takes a significant amount of effort to collect data by examining various documents and interviewing different people, to develop
assumptions for simlifying analysis and to present the data in an understandable form.
Exhibit 4 demand forecast
Use the specified historical demand data to simulate the demand for the new service. Use the Monte Carlo Method to determine the expected average monthly demand over the first 6 months of the service. Conduct 200 replications of the simulation model to determine your results.
Please see the attached file(s) for the complete tutorial. Thank you for the opportunity to be of assistance and of course, the opportunity to learn as well.
Capacity Planning Data
The company needs to plan for the capacity required to produce the new equipment for the satellite dish venture because the existing capacity is insufficient there are several options to add capacity: however, the selection depends on the market for the new service.
The basic decision is to do one of the following to increase capacity:
Build a new plant in Wisconsin
Buy an existing plant in Indiana from a smaller company
Subcontract the required capacity from available vendors
Buy new equipment to boost the capacity of existing plants
If the company undertakes the second option, it can engage the services of a survey company to narrow the search for a potential plant that can be bought.
Of course, the decision depends on how the market for the new service turns out in the future. The company managers think the market can be predicted to turn in one of three ways, favorable, ...
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