SBM1108  ACCOUNTS ASSIGNMENT  ACCOUNTS
Assignment Task Description
You are required to analyse the following problems and discuss an appropriate decision making or modelling approach for your proposed solution.
Q5. Lars Van Hoek is about to install a new machine for making parts for domestic appliances. Three suppliers have made bids to supply the machine. The first supplier offers the Basic or machine, which automatically produces parts of acceptable, but not outstanding, quality.
The output from the machine varies (depending on the materials used and a variety of settings) and might be 1,000 a week (with probability 0.1), 2,000 a week (with probability 0.7) or 3,000 a week. The net profit for the machine is $4 a unit. The second supplier offers a Supertramp machine, which makes higher quality parts. The output from this might be 700 a week (with probability 0.4) or 1,000 a week, with a net profit of $10 a unit. The third supplier offers the Switchover machine, which managers can set to produce either 1,300 highquality parts a week at a profit of $6 a unit, or 1,600 mediumquality parts a week with a profit of $5 a unit. If the machine produces 2,000 or more units a week, Lars can export all production as a single bulk order. Then there is a 60% chance of selling this order for 50% more profit and a 40% chance of selling for 50% less profit. What should Lars do to maximize the expected profit?
Q6. Sunseed industries produce different types of raw materials and it is interesting is using simulation to estimate the profit per unit for its new product x. the selling price for the product will be $40 per unit. Probability distributions for the raw material cost, the production cost, and the marketing cost are estimated as follows:
Raw material cost($)

Probability

Production
Cost($)

Probability

Marketing
Cost($)

Probability

16

0.20

10

0.25

5

0.40

18

0.30

11

0.45

6

0.60

20

0.35

12

0.30


22

0.15


a.compute profit per unit for the base case, worst case, and best case.
b.construct a simulation model to estimate the mean profit per unit.

 management believes the project may not be sustainable if the profit per unit is less than $2. Use simulation to estimate the probability the profit per unit will be less than $2.
You are required to analyse the following problems and discuss an appropriate decision making or modelling approach for your proposed solution.
The proposed decision making must then be presented to an audience with full justification of your assumptions and constraints. It should be clear to the audience exactly how and what type of modelling approach you have selected for the business problem.
Q7. An electronics store sells two models of television. The sales of these two models, X and Y, are dependent, that is, if the price of one increases, the demand for the other increases. A study is made to find the relationship between the demand (D) and the price (P) in order to maximize the revenue from these products. The result of the study is shown below:
Dx = 476 – 0.54 Px + 0.22 Py
Dy = 601 + 0.12 Px – 0.54 Py
 Construct a model for that total revenue and implement it on a spreadsheet.
 Develop a twoway data table to estimate the optimal pieces of each of the two products in order to maximize the total revenue. Vary price of each product from $600 to $900 in increments of $50.
Show your workings in excel and save your file as Q6#IDSBM1108.xls (20 marks)
Q8. Bob Jane tyres, Inc. makes two types of tyres, for suvs and Hatchbacks. The firm has 500 hours of production time, 250 hours available for shipping. The production time required per type is given in the following table:
Product Hours


Type

Production

Packaging

Shipping

Profit/Tyre

SUV tyres

2

1.5

1

$22

Hatchbacks tyres

1.5

1

0.5

$12

Assuming that the company is interested in maximizing the total profit contribution, find the optimal solution using Excel Solver and answer the following using the sensitivity analysis report:
 How many hours of production time will be scheduled in each department?
 What is the slack time in each department?
 If one more hour is available for packaging, what is the change in profit?
 What is the change in profit if one more hour is available for shipping?
Show your workings in Excel and save your file as Q8#IDSBM1108.xls
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