MAT 540 Strayer University- Assignment 1: JET Copies Case Problem

Read the “JET Copies” Case Problem on pages 678-679 of the text. Using simulation estimate the loss of revenue due to copier breakdown for one year, as follows:In Excel, use a suitable method for generating the number of days needed to repair the copier, when it is out of service, according to the discrete distribution shown.In Excel, use a suitable method for simulating the interval between successive breakdowns, according to the continuous distribution shown.In Excel, use a suitable method for simulating the lost revenue for each day the copier is out of service.Put all of this together to simulate the lost revenue due to copier breakdowns over 1 year to answer the question asked in the case study.In a word processing program, write a brief description/explanation of how you implemented each component of the model. Write 1-2 paragraphs for each component of the model (days-to-repair; interval between breakdowns; lost revenue; putting it together).Answer the question posed in the case study. How confident are you that this answer is a good one? What are the limits of the study? Write at least one paragraph.JET CopiesJames Banks was standing in line next to Robin Cole at Klecko’sCopy Center, waiting to use one of the copy machines. “Gee,Robin,I hate this,”he said.“We have to drive all the way over herefrom Southgate and then wait in line to use these copy machines.I hate wasting time like this.”“I know what you mean,”said Robin.“And look who’s here.Alot ofthese students are from Southgate Apartments or one oftheother apartments near us. It seems as though it would be morelogical ifKlecko’s would move its operation over to us,instead ofall ofus coming over here.” Case Problems 679James looked around and noticed what Robin was talkingabout. Robin and he were students at State University, and mostof the customers at Klecko’s were also students. As Robinsuggested, a lot of the people waiting were State students wholived at Southgate Apartments,where James also lived with ErnieMoore.This gave James an idea,which he shared with Ernie andtheir friend Terri Jones when he got home later that evening.“Look,you guys,I’ve got an idea to make some money,”Jamesstarted. “Let’s open a copy business! All we have to do is buy acopier, put it in Terri’s duplex next door, and sell copies. I knowwe can get customers because I’ve just seen them all at Klecko’s.Ifwe provide a copy service right here in the Southgate complex,we’ll make a killing.”Terri and Ernie liked the idea, so the three decided to go intothe copying business. They would call it JET Copies, named forJames, Ernie, and Terri. Their first step was to purchase a copier.They bought one like the one used in the college ofbusiness officeat State for $18,000. (Terri’s parents provided a loan.) The com-pany that sold them the copier touted the copier’s reliability, butafter they bought it,Ernie talked with someone in the dean’s officeat State,who told him that the University’s copier broke down fre-quently and when it did,it often took between 1 and 4days to getit repaired.When Ernie told this to Terri and James,they becameworried. If the copier broke down frequently and was not in usefor long periods while they waited for a repair person to come fixit, they could lose a lot of revenue. As a result, James, Ernie, andTerri thought they might need to purchase a smaller backupcopier for $8,000 to use when the main copier broke down.However,before they approached Terri’s parents for another loan,they wanted to have an estimate of just how much money theymight lose if they did not have a backup copier. To get this esti-mate, they decided to develop a simulation model because theywere studying simulation in one oftheir classes atState.To develop a simulation model,they first needed to know howfrequently the copier might break down—specifically, the timebetween breakdowns. No one could provide them with an exactprobability distribution,but from talking to staffmembers in thecollege ofbusiness,James estimated that the time between break-downs was probably between 0 and 6 weeks,with the probabilityincreasing the longer the copier went without breaking down.Thus,the probability distribution ofbreakdowns generally lookedlike the following:Next, they needed to know how long it would take to get thecopier repaired when it broke down. They had a service contractwith the dealer that “guaranteed”prompt repair service. However,Terri gathered some data from the college of business from whichshe developed the following probability distribution ofrepair times:Repair Time (days) Probability1 .202 .453 .254 .101 .00Finally, they needed to estimate how much business they wouldlose while the copier was waiting for repair. The three of them hadonly a vague idea of how much business they would do but finallyestimated that they would sell between 2,000 and 8,000 copies per dayat $0.10 per copy. However, they had no idea about what kind ofprobability distribution to use for this range ofvalues.Therefore,theydecided to use a uniform probability distribution between 2,000 and8,000 copies to estimate the number ofcopies they would sell per day.James,Ernie,and Terri decided that iftheir loss ofrevenue due tomachine downtime during 1 year was $12,000 or more, they shouldpurchase a backup copier. Thus, they needed to simulate the break-down and repair process for a number of years to obtain an averageannual loss ofrevenue.However,before programming the simulationmodel,they decided to conduct a manual simulation ofthis process for1 year to see ifthe model was working correctly.Perform this manualsimulation for JET Copies and determine the loss ofrevenue for 1 year.(Bernard W. Taylor. Introduction to Management Science, 10th Edition. Prentice Hall/CourseSmart, 02/23/2009. 678 – 679).