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IBM401 Lecture 11
 

IBM401 Lecture 11

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    IBM401 Lecture 11 IBM401 Lecture 11 Presentation Transcript

    • Quantitative Analysis for Business
      Lecture 11
      September 20th, 2010
      http://www.slideshare.net/saark/ibm401-lecture-11
    • Example i
      Table on the left is cost of operating a machine at different age of the machine in years
      Find average cost of maintaining the machine
      How much does the cost deviate from year to year?
      Find sample covariance between cost and age
      How much does the cost increase each year?
      Estimate the operating costs of
      0-year-old machine
      10-year-old machine
    • Example ii
      Plastic tube is extruded from 3 machines according to tube length. Unit cost for tube is 20B per cm. The setup cost of as shown in table.
      Find cost estimation equation for all 3 machines
      List price for plastic tube from 1m to 15m.
    • Example iii
      At a unit price of $25, weekly demand for a product is 300 units. At a unit price of $40, the weekly demand is 150 units.
      Find an estimated linear model between weekly demand and unit price.
      What is the best estimation price point to meet weekly demand of 500 units?
    • Example iv
    • solutions
    • Example i
      Find average cost of maintaining the machine
      How much does the cost deviate from year to year?
      Find sample covariance between cost and age
    • Example i
      How much does the cost increase each year?
      Estimate the operating costs of
      0-year-old machine
      10-year-old machine
    • Example ii
      Find cost estimation equation for all 3 machines
      Cost = 200 + 20L for L < 5
      Cost = 500 + 20L for 10 <= L <= 5
      Cost = 800 + 20L for L > 10
      List price for plastic tube from 1m to 15m.
    • Example iii
      Find an estimated linear model between weekly demand and unit price.
      Two conditions given for this relationship
      Demand = b0 + b1P
      300 = b0 + b1(25)
      150 = b0 + b1(40)
      Solving those 2 equations
      b0 = 550
      b1 = -10
      What is the best estimation price point to meet weekly demand of 500 units?
      P = (Demand – b0)/b1
      P = (500 – 550)/(-10) = 5
    • Example iv
    • Example iv