The equipment installation group at Globus Enterprises is about to make a cost e
ID: 3851080 • Letter: T
Question
The equipment installation group at Globus Enterprises is about to make a cost estimate to determine how much it will cost to install a back-up generator at a government laboratory facility. Over the years, this group has carried out more than 100 such installations and has developed a database reflecting past experience. Data on the distribution of cost for design work, building effort, and testing effort is provided in Table 1.
Cheapest
($/%)
Usual
($/%)
Expensive
($/%)
Design
9,000/30
10,000/40
12,000/30
Build
60,000/20
70,000/60
80,000/20
Test
18,000/20
20,000/50
24,000/30
Table 1. Historical Data on Cost Distributions
The data in the table picture the cost of an effort and the percentage of times this cost is achieved. For example, 30% of the time, “Design” cost $9,000; 40% of the time it cost $10,000; 30% of the time it cost $12,000.
00 16 45 84 18
83 28 82 36 91
95 14 80 68 34
54 55 13 20 70
57 68 61 37 30
09 81 24 55 21
Table 2. Two-digit Random Numbers
Conduct a Monte Carlo simulation to create a distribution portraying total estimated project costs. Employ ten iterations in your computation. Display the distribution graphically.
Cheapest
($/%)
Usual
($/%)
Expensive
($/%)
Design
9,000/30
10,000/40
12,000/30
Build
60,000/20
70,000/60
80,000/20
Test
18,000/20
20,000/50
24,000/30
Table 1. Historical Data on Cost Distributions
The data in the table picture the cost of an effort and the percentage of times this cost is achieved. For example, 30% of the time, “Design” cost $9,000; 40% of the time it cost $10,000; 30% of the time it cost $12,000.
Explanation / Answer
Answer for your Question
Computing standard deviation for following numbers: 8, 4, 10, 7, 6
x – X –
X X-bar bar Squared
8.00 7.00 1.00 1.00
4.00 7.00 -3.00 9.00
10.00 7.00 3.00 9.00
7.00 7.00 0.00 0.00
6.00 7.00 -1.00 1.00
Total = 35.00 20.00
Average = X-Bar = 7.00 4.00 (Sum Squared)/N = Variance
2.00 Sqrt(Variance) = Standard Deviation
Computing standard deviation for following numbers: 6, 7, 5.5, 8, 8.5
x – X –
X X-bar bar Squared
6.00 7.00 -1.00 1.00
7.00 7.00 0.00 0.00
5.50 7.00 -1.50 2.25
8.00 7.00 1.00 1.00
8.50 7.00 1.50 2.25
Total = 35.00 6.50
Average = X-Bar = 7.00 1.30 (Sum Squared)/N = Variance
1.14 Sqrt(Variance) = Standard Deviation
Note that the spread of numbers in the first case above is greater than the second case,
so that standard deviation in the first case (SD = 2.00) is greater than in the second (SD = 1.14)
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