Do the above-given problem according to the example pattern or method with the t
ID: 3298267 • Letter: D
Question
Do the above-given problem according to the example pattern or method with the terms like present worth etc.,
A company that manufactures automobile parts is weighting the possibility of investing in an FMC (Flexible Manufacturing Cell). This is a separate investment and not a replacement of the existing facility. Management desires a good estimate of the distribution characteristics for the AW. There are three random variables; i.e., they have uncertainties in their values An economic analyst is hired to estimate the desired parameter, AW. He concludes that the scenario presented to him is suitable for Monte Carlo simulation (method of statistical trials) because there are uncertainties in three variables and the direct analytical approach is virtually impossible The company has done a preliminary economic study of the situation and provided the analyst with the following estimates Investment Normally distributed with mean of $100,000 and standard deviation of $10,000 Uniformly distributed with minimum of 5 years and maximum of 15 years $20,000 (single outcome $20,000 probability 0.3 $16,000 probability 0.5 $22,000 probability 0.2 10% Useful Life Market value Annual net cash flow Interest rate All the elements subject to variation vary independently 1) Use Monte Carlo simulation to generate 2000 AW outcomes for the proposed FMC. 2) Find the Average AW and Number of Positive AW 3) Graph the results of analysis 4) Interpret the resultsExplanation / Answer
RND
P
RN
N
N
R
A
AW
1.102
211020
131
6.31
6
4
16000
-34450.192
0.1482
201480
513
10.13
10
5
16000
-187803.796
2.372
223720
350
8.50
9
4
16000
-24837.792
-0.145
198550
904
14.04
14
7
16000
-12943.235
0.104
201040
440
9.40
9
9
22000
-14900.544
1.419
214190
107
6.07
6
4
16000
-35178.024
0.069
200690
507
10.07
10
5
16000
-18652.263
0.797
207970
782
12.82
13
6
16000
-15282.176
-0.393
196070
258
7.58
8
8
22000
-16743.518
-0.874
191260
504
10.04
10
3
16000
-17118.002
SUM
-208886.54
So, the estimate of AW based on 10 repetitions of the experiments is – 208886.54
[AW] =sqrt((AWi-E[W])2)/sqrt(K-1)
= 7992.784
if you will get even closer with more trials
RND
P
RN
N
N
R
A
AW
1.102
211020
131
6.31
6
4
16000
-34450.192
0.1482
201480
513
10.13
10
5
16000
-187803.796
2.372
223720
350
8.50
9
4
16000
-24837.792
-0.145
198550
904
14.04
14
7
16000
-12943.235
0.104
201040
440
9.40
9
9
22000
-14900.544
1.419
214190
107
6.07
6
4
16000
-35178.024
0.069
200690
507
10.07
10
5
16000
-18652.263
0.797
207970
782
12.82
13
6
16000
-15282.176
-0.393
196070
258
7.58
8
8
22000
-16743.518
-0.874
191260
504
10.04
10
3
16000
-17118.002
SUM
-208886.54
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.