Problem #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: 1. 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. 2. In Excel, use a suitable method for simulating the interval between successive breakdowns, according to the continuous distribution shown. 3. In Excel, use a suitable method for simulating the lost revenue for each day the copier is out of service. 4. 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. 5. 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). 6. 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. There are two deliverables for this Case Problem, the Excel spreadsheet and the written description/explanation. Outcome Assessed: · Create statistical analysis of simulation results. · Communicate issues in management science  Grading Rubric for JET Copies Case Problem There are 12 possible points in each of the five criteria for a total of 60 points possible. Criteria 0Unacceptable(0 points) 1Developing(6 points) 2Competent(9 points) 3Exemplary(12 points) 1. Model number of days to repair Did not submit or did not model this component in an appropriate manner This component was modeled, but the method and/or implementation had mistakes that affected the validity of the model Used a method that is recognizably appropriate, but the implementation had minor mistakes Used an appropriate method and correctly implemented it 2. Model number of weeks between breakdowns Did not submit or did not model this component in an appropriate manner This component was modeled, but the method and/or implementation had mistakes that affected the validity of the model Used a method that is recognizably appropriate, but the implementation had minor mistakes Used an appropriate method and correctly implemented it 3. Model lost revenue due to breakdowns Did not submit or did not model this component in an appropriate manner This component was modeled, but the method and/or implementation had mistakes that affected the validity of the model Used a method that is recognizably appropriate, but the implementation had minor mistakes Used an appropriate method and correctly implemented it 4. Provide written description and explanation of the simulation Did not submit or described insufficiently. Omitted key points. Provided partially developed written description that matches the method 70 - 79% accur.

1. Problem #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:
1. 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.
2. In Excel, use a suitable method for simulating the interval
between successive breakdowns, according to the continuous
distribution shown.
3. In Excel, use a suitable method for simulating the lost
revenue for each day the copier is out of service.
4. 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.
5. 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).
6. 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.
There are two deliverables for this Case Problem, the Excel
spreadsheet and the written description/explanation.
Outcome Assessed:
· Create statistical analysis of simulation results.
· Communicate issues in management science
Grading Rubric for JET Copies Case Problem
There are 12 possible points in each of the five criteria for a

2. total of 60 points possible.
Criteria
0Unacceptable(0 points)
1Developing(6 points)
2Competent(9 points)
3Exemplary(12 points)
1. Model number of days to repair
Did not submit or did not model this component in an
appropriate manner
This component was modeled, but the method and/or
implementation had mistakes that affected the validity of the
model
Used a method that is recognizably appropriate, but the
implementation had minor mistakes
Used an appropriate method and correctly implemented it
2. Model number of weeks between breakdowns
Did not submit or did not model this component in an
appropriate manner
This component was modeled, but the method and/or
implementation had mistakes that affected the validity of the
model
Used a method that is recognizably appropriate, but the
implementation had minor mistakes
Used an appropriate method and correctly implemented it
3. Model lost revenue due to breakdowns
Did not submit or did not model this component in an
appropriate manner
This component was modeled, but the method and/or
implementation had mistakes that affected the validity of the
model
Used a method that is recognizably appropriate, but the
implementation had minor mistakes
Used an appropriate method and correctly implemented it
4. Provide written description and explanation of the simulation
Did not submit or described insufficiently. Omitted key points.

3. Provided partially developed written description that matches
the method 70 - 79% accuracy.
Provided sufficiently developed written description that
matches the method 80 - 89% accuracy.
Provided fully developed written description that is correct and
matches the method used with 90 - 100% accuracy.
5. Combine model components to produce a coherent answer to
the question posed in the case study. (a) Answer the question
posed in the case study. (b) How confident are you that this
answer is a good one? (c) What are the limits of the study?
Did not submit or result not provided, and/or discussed
insufficiently.
Provided partially correct result. Omitted discussion of
confidence. Discussed limitations partially with 70 - 79%
accuracy, logic, and clarity.
Provided sufficiently correct result. Identified confidence and
discussed limitations sufficiently with 80 - 89% accuracy,
accuracy, logic, and clarity.
Provided fully correct result. Identified confidence and
discussed limitations fully with 90 - 100% accuracy, logic, and
clarity.
Problem #2: Internet Field Trip
1. Research: Research at least six (6) information sources on
forecasting methods; take notes and record and interpret
significant facts, meaningful graphics, accurate sounds and
evaluated alternative points of view.
2. Preparation: Produce as storyboard with thumbnails of at
least ten (10) slides. Include the following elements:
· Title of slide, text, background color, placement & size of
graphic, fonts - color, size, type for text and headings
· Hyperlinks (list URLs of any site linked from the slide),
narration text, and audio files (if any)
· Number on slides clear

4. · Logical sequence to the presentation
Content: Provide written content with the following elements:
· introduction that presents the overall topic (clear sense of the
project's main idea) and draws the audience into the
presentation with compelling questions or by relating to the
audience's interests or goals.
· accurate, current
· clear, concise, and shows logical progression of ideas and
supporting information
· motivating questions and advanced organizers
· drawn mainly from primary sources
Text Elements: Slides should have the following characteristics:
· fonts are easy-to-read; point size that varies appropriately for
headings and text
· italics, bold, and indentations enhance readability
· background and colors enhance the readability of text
· appropriate in length for the target audience; to the point
Layout: The layout should have the following characteristics:
· visually pleasing
· contributes to the overall message
· appropriate use of headings, subheadings and white space
Media: The graphics, sound, and/or animation should
· assist in presenting an overall theme and enhance
understanding of concept, ideas and relationships
· have original images that are created using proper size and
resolution; enhance the content
· have a consistent visual theme.
Citations: The sources of information should:
· properly cited so that the audience can determine the
credibility and authority of the information presented
· be properly formatted according to APA style
The assignment will be graded using the associated rubric.
Grading Rubric for Assignment # 2 Internet Field Trip
There are 8 possible points for each of the 5 criteria,so that the
total number of points is 40 points.

5. Criteria
0 Unacceptable (0 points)
1 Developing (4 points)
2 Competent (6 points)
3 Exemplary (8 points)
1. a) Research: Showed research of at least six (6) information
sources; take notes and record and interpret significant facts,
meaningful graphics, accurate sounds and evaluated alternative
points of view. b) Preparation: Produced storyboard with
thumbnails of 10 slides with these elements: (1) Title of slide,
text, background color, placement & size of graphic, fonts,
color (2) size, type for text and headings (3) Hyperlinks (list
URLs of any site linked from the slide), narration text, and
audio files (if any) (4) Number on slides clear (5) Logical
sequence to the presentation
Did not submit or note cards showed insufficiently completed
research from two (2) or fewer information sources.
Insufficiently recorded and interpreted facts, graphics, sounds,
or did not evaluate alternate points of view. Did not submit or
produced insufficiently developed storyboard with thumbnails
of one (1) to five (5) slides with one (1) to Two (2) required
elements. Fulfilled with less than 70% accuracy, quality, and
thoroughness.
Note cards showed partially completed research from at least
three (3) information sources; recorded and interpreted some
acceptable facts, some appropriate graphics, sounds and
sufficiently evaluated alternative points of view. Produced
partially developed storyboard with thumbnails of at least six
(6) or seven (7) slides with three (3) of the (5) required
elements. Fulfilled with 70 - 79% accuracy, quality, and
thoroughness.
Note cards showed sufficiently completed research from at least
four (4) or five (5) information sources; recorded and
interpreted acceptable facts, appropriate graphics, accurate
sounds, and sufficiently evaluated alternative points of view.

6. Produced sufficiently developed storyboard with thumbnails of
at least eight (8) slides with four (4) of the (5) required
elements. Fulfilled with 80 - 89% accuracy, quality, and
thoroughness.
Note cards showed fully completed research from at least six
(6) information sources; recorded and interpreted significant
facts, meaningful graphics, accurate sounds, and fully evaluated
alternative points of view. Prepared fully developed storyboard
with thumbnails of at least 10 slides with all five (5) required
elements. Fulfilled with 90 - 100% accuracy, quality, and
thoroughness.
2. Content: Provided content with (1) attention-getting
introduction, (2) content that is accurate and current (3) clear,
concise, and shows logical progression of ideas, (4) supporting
information motivating questions and advanced organizers, (5)
taken from primary sources
Did not submit or provided insufficiently developed
introduction and content with two (2) or fewer of required
elements included. Addressed with less than 70% accuracy,
motivation, logic, support, and research.
Provided partially developed introduction and content with
three (5) of five (5) required elements included. Addressed with
70-79% accuracy, motivation, logic, support, and research.
Provided sufficiently developed introduction and content with
four (4) of five (5) required elements included. Addressed with
80-89% accuracy, motivation, logic, support, and research.
Provided excellent and fully developed introduction and content
with all five (5) required elements included. Addressed with 90-
100% accuracy, motivation, logic, support, and research.
3. Text Elements: (1) fonts are easy-to-read; (2) point size that
varies appropriately for headings, and text (3) italics, bold, and
indentations enhance readability, (4) background and colors
enhance the readability of text, (5) appropriate in length for the
target audience; (6) to the point (7) Applied correct spelling,
punctuation, grammar, and (8) APA style.
Did not submit or did not demonstrate acceptable use of the text

7. elements. Issues with text elements prevented effective
communication of message. Had 8 + errors in spelling,
punctuation, grammar, and APA style.
Demonstrated acceptable use of 4 - 5 text elements. Text
elements provided some helpful support to the communication
of the message. Had 6 - 7 errors in spelling, punctuation,
grammar, and APA style. Fulfilled with 70 - 79% quality and
accuracy.
Demonstrated sufficient use of 6 - 7 of the text elements. Text
elements provided sufficient support to the communication of
the message. Had no 3 - 5 errors in spelling, punctuation,
grammar, and APA style. Fulfilled with 80 - 89% quality and
accuracy.
Demonstrated excellent use of all 8 text elements. Text
elements provided outstanding support to the communication of
the message. Had 0 - 2 errors in spelling, punctuation, grammar,
and APA style. Fulfilled with 90 - 100% quality and accuracy.
4. Layout: The layout of the message demonstrated these
characteristics: (1) visually pleasing;(2) contributed to the
overall message; had (3) appropriate headings, (4) subheadings,
(5) and white space
Did not submit or the layout of the message was not acceptable
and did not support communication of the message sufficiently.
Layout did not include enough of the five (5) of the layout
characteristics.
The layout of the message was acceptable and supported
communication of it to some extent. Layout included three (3)
of the five (5) of the layout characteristics. Fulfilled with 70 -
79% quality and accuracy.
The layout of the message was good and supported
communication of it sufficiently. Layout included four (4) of
the five (5) of the layout characteristics. Fulfilled with 80 - 89%
quality and accuracy.
The layout of the message was excellent and supported
communication of it very well. Layout included all five (5) of
the layout characteristics. Fulfilled with 90 - 100% quality and

8. accuracy.
5. Media: The media should include these characteristics: (1)
graphics, sound, and/or animation that assist in presenting an
overall theme and enhance understanding of concept, ideas and
relationships; (2) have original images; graphics are created
using proper size and resolution; enhance the content; (3) have
a consistent visual theme.
Did not submit or the media used were unacceptable and did not
meet the requirements.
Provided media that were acceptable and met only one (1) of the
three (3) characteristics. Fulfilled with 70 - 79% quality and
accuracy.
Provided media that were sufficient and met two (2) of the three
(3) characteristics. Fulfilled with 80 - 89% quality and
accuracy.
Provided media that were excellent and met all three (3) of the
characteristics. Fulfilled with 90 - 100% quality and accuracy.
Problem Set 4 FINA 6223
Due Date: Tuesday, April 29, 2014 Spring 2014
1. (10 points) You obtained the following information:
Bond
Face valueCoupon rate
Coupon Payments
Maturity (years)
YTM1Zero-Coupon Bond
$1,000
-
-
0.5
3.25%Zero-Coupon Bond
$1,000
-

9. -
1
3.50%Zero-Coupon Bond
$1,000
-
-
1.5
3.75%Zero-Coupon Bond
$1,000
-
-
2
3.90%US Treasury Note
$1,000
3.00%
Semiannual
2
?US Treasury Note
$1,000
3.50%
Semiannual
5
4.00%
US Treasury Note
$1,000
3.75%Semiannual
10
4.25%
1 YTMs are annualized rates that have been annualized by
multiplying the semiannual rates by two.
(a) (1 point) Determine the price of the 5-year and 10-year US
Treasury notes. Please round your answers to the nearest cent
(e.g., $1.23).
Price of 5-year US Treasury Note

10. Price of 10-year US Treasury Note
(b) (1 point) Suppose that interest rates increase 1%. Find the
percentage change in the price of the 5-year and 10-year US
Treasury notes. Note that you need to re-compute the prices of
the two notes with the higher interest rates. Please round your
answers to the nearest basis point (e.g., 1.23%).
Price of 5-year US Treasury Note (with YTM =5.00%)
Price of 10-year US Treasury Note (with YTM =5.25%)
Percentage Change in Price of 5-year Treasury Note
Percentage Change in Price of 10-year Treasury Note
(c) (2 points) Compute the duration of the 5-year and 10-year

11. US Treasury notes. Please report the duration in semesters (e.g.,
9.8765 semesters).
Duration of 5-year US Treasury Note (using Po = $979.59 from
part a)
Duration = 10.97533259 Semesters
t
ct
ct/(1-y*)^t
[ct/(1-y*)^t]/p
t[ct/(1-y*)^t]/p
1
17.5
17.46506986
0.017828959
0.017828959
2
17.5
17.43020944
0.017793372
0.035586744
3
17.5
17.3954186
0.017757856
0.053273569
4
17.5
17.36069721
0.017722412
0.070889647
5
17.5
17.32604512
0.017687038
0.088435188

12. 6
17.5
17.2914622
0.017651734
0.105910405
7
17.5
17.2569483
0.017616501
0.123315508
8
17.5
17.22250329
0.017581338
0.140650707
9
17.5
17.18812704
0.017546246
0.157916213
10
1017.5
997.3720708
1.018152565
10.18152565
D
10.97533259
Duration of 10-year US Treasury Note (using Po = $961.25
from part a)
Duration = 16.75242514 Semesters
t
ct

13. ct/(1-y*)^t
[ct/(1-y*)^t]/p
t[ct/(1-y*)^t]/p
1
18.75
18.35985312
0.019099977
0.019099977
2
18.75
17.97782435
0.018702548
0.037405096
3
18.75
17.60374478
0.018313389
0.054940166
4
18.75
17.23744899
0.017932327
0.071729307
5
18.75
16.87877502
0.017559194
0.087795969
6
18.75
16.52756428
0.017193825
0.10316295
7
18.75
16.18366147

14. 0.016836059
0.117852411
8
18.75
15.84691454
0.016485737
0.131885895
9
18.75
15.51717458
0.016142704
0.145284339
10
18.75
15.19429579
0.01580681
0.158068097
11
18.75
14.87813541
0.015477904
0.170256946
12
18.75
14.56855365
0.015155843
0.181870111
13
18.75
14.26541361
0.014840482
0.19292627
14
18.75
13.96858126
0.014531684

15. 0.203443576
15
18.75
13.67792534
0.014229311
0.213439667
16
18.75
13.39331735
0.01393323
0.22293168
17
18.75
13.11463143
0.01364331
0.231936265
18
18.75
12.84174436
0.013359422
0.240469595
19
18.75
12.57453549
0.013081441
0.248547385
20
1018.75
669.0001743
0.695968972
13.91937944
D
16.75242514

16. (d) (2 points) Using duration, find the approximate percentage
change in the price of 5-year and 10-year US Treasury notes
arising from interest rates increasing 1%. Please round your
answers to the nearest basis point (e.g., 1.23%).
Approximate % Change Price of 5-year US Treasury Note
Approximate % Change Price of 10-year US Treasury Note
(e) (1 point) How does the approximate percentage change in
price obtained in part (d) compare with the percentage change
in price obtained in part (b). Why? Hint: you may want to
recognize: (i) the convex relation between a bond price and its
YTM; and (ii) the fact that duration provides a linear
approximation to this relation.
The approximate percentage change in price overestimates the
price change of the 5-year and 10-year Treasury Notes
compared with the percentage change obtained in part b. Using
the approximate percentage change using durations, the linear
approximation overestimates the price as interest rates increases
estimating a -5.49% and –8.38% change in the 5-year and 10-
year Treasury Note respectively. However, the true relation
between bond prices and interest rates is convex and using part
(b) the percentage change in price is -4.02% and -7.52% in the
5-year and 10-year Treasury Note respectively.

17. (f) (3 points) Suppose that there are no arbitrage opportunities.
Find the price and the YTM of the 2-year US Treasury Note.
Hint: in determining the price of the Treasury note you may
want to replicate the Treasury note with a portfolio of zero-
coupon bonds following the approach covered in class.
Zero-coupon maturity
YTM
T
Value
0.5
0.0325
1
984.0098401
1
0.035
2
965.8977718
1.5
0.0375
3
945.7952635
2
0.039
4
925.6591098
Price of 2-year Treasury Note = $982.98
= (0.015*984) + (0.015*965.9) + (0.015*945.8) +
(1.015*925.66)
= 982.98
YTM of 2-year Treasury Note =

18. Solve for y:
Y =
1
P 0 =18.75×
1− 1
(1+ 0.02125)19
0.02125
⎡
⎣
⎢
⎢
⎢
⎢
⎤
⎦
⎥
⎥
⎥
⎥

19. +
1000
(1+ 0.02125)19
≈ 961.25
P
0
=18.75´
1-
1
(1+0.02125)
19
0.02125
é
ë
ê
ê
ê
ê
ù
û
ú
ú
ú
ú
+
1000
(1+0.02125)
19
»961.25
P 0 =17.5×
1− 1

20. (1+ 0.025)9
0.025
⎡
⎣
⎢
⎢
⎢
⎢
⎤
⎦
⎥
⎥
⎥
⎥
+
1000
(1+ 0.025)9
≈ 940.22
P
0
=17.5´
1-
1
(1+0.025)
9
0.025

21. é
ë
ê
ê
ê
ê
ù
û
ú
ú
ú
ú
+
1000
(1+0.025)
9
»940.22
P 0 =18.75×
1− 1
(1+ 0.02625)19
0.02625
⎡
⎣
⎢
⎢
⎢
⎢
⎤

22. ⎦
⎥
⎥
⎥
⎥
+
1000
(1+ 0.02625)19
≈ 888.92
P
0
=18.75´
1-
1
(1+0.02625)
19
0.02625
é
ë
ê
ê
ê
ê
ù
û
ú
ú
ú
ú
+
1000

23. (1+0.02625)
19
»888.92
Δ%P 0 =
P1
P0
−1
= $940.22
$979.59
−1
Δ%P 0 = -0.04019 = - 4.02%
D%P
0
=
P1
P0
-1
=
$940.22
$979.59
-1
D%P
0
= -0.04019 = - 4.02%
Δ%P 0 =
P1
P0

24. −1
= $888.92
$961.25
−1
Δ%P 0 = -0.0752 = -7.52%
D%P
0
=
P1
P0
-1
=
$888.92
$961.25
-1
D%P
0
= -0.0752 = -7.52%
Δ%P 0 ≈ −
D
1+ y*
×Δy*
≈ − 5.49
1
×1%

25. ≈ −5.49%
D%P
0
»-
D
1+y*
´Dy*
»-
5.49
1
´1%
»-5.49%
Δ%P 0 ≈ −
D
1+ y*
×Δy*
≈ − 8.38
1
×1%
≈ −8.38%
D%P
0
»-
D
1+y*
´Dy*
»-
8.38

26. 1
´1%
»-8.38%
V 0 = 982.98 =15×
1− 1
(1+ y
2
)4
y
2
⎡
⎣
⎢
⎢
⎢
⎢
⎢
⎢
⎤
⎦
⎥
⎥
⎥
⎥

27. ⎥
⎥
+
1000
(1+ y
2
)4
V
0
=982.98=15´
1-
1
(1+
y
2
)
4
y
2
é
ë
ê
ê
ê
ê
ê
ê
ù
û
ú
ú
ú

28. ú
ú
ú
+
1000
(1+
y
2
)
4
P 0 =17.5×
1− 1
(1+ 0.02)9
0.02
⎡
⎣
⎢
⎢
⎢
⎢
⎤
⎦
⎥
⎥
⎥
⎥

29. +
1000
(1+ 0.02)9
≈ 979.59
P
0
=17.5´
1-
1
(1+0.02)
9
0.02
é
ë
ê
ê
ê
ê
ù
û
ú
ú
ú
ú
+
1000
(1+0.02)
9
»979.59
Sheet1tctct/(1-y*)^tct/(1-y*)^t/ptct/(1-
y*)^t/p132.92682926830.02872820250.0287282025232.855443
18860.02802751460.0560550292332.78579823280.0273439167

30. 0.0820317501410393.31291641440.91591005513.6636402204D
=
sum3.83045520220.8007283618800.72836176890.19927163827.
9708655292139.4901467618940.2185085307Part CDuration of
5-year US Treasury Note (using Po = $979.59)tctct/(1-
y*)^t[ct/(1-y*)^t]/pt[ct/(1-
y*)^t]/p117.517.46506986030.01782895890.0178289589217.51
7.43020944140.01779337220.0355867443317.517.39541860420
.01775785650.0532735694417.517.36069720980.01772241160.
0708896465517.517.32604511950.01768703760.088435187861
7.517.29146219510.01765173410.1059104045717.517.2569482
9850.01761650110.1233155076817.517.2225032920.017581338
40.1406507073917.517.18812703790.01754624590.1579162133
101017.5997.37207077531.018152564610.1815256462D10.975
3325858Duration of 10-year US Treasury Note (using Po =
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31. Case Problem
JET Copies
James Banks was standing in line next to Robin Cole at
Klecko’s
Copy Center, waiting to use one of the copy machines. “Gee,
Robin, I hate this,” he said. “We have to drive all the way over
here
from 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. A
lot of these students are from Southgate Apartments or one of
the
other apartments near us. It seems as though it would be more
logical if Klecko’s would move its operation over to us, instead
of
all of us coming over here.”
ISBN 0-558-55519-5
Introduction to Management Science, Tenth Edition, by Bernard
W. Taylor III. Published by Prentice Hall. Copyright © 2010 by
Pearson Education, Inc.
Case Problems 679
James looked around and noticed what Robin was talking
about. Robin and he were students at State University, and most
of the customers at Klecko’s were also students. As Robin
suggested, a lot of the people waiting were State students who
lived at Southgate Apartments, where James also lived with
Ernie
Moore. This gave James an idea, which he shared with Ernie
and
their friend Terri Jones when he got home later that evening.
“Look, you guys, I’ve got an idea to make some money,” James
started. “Let’s open a copy business! All we have to do is buy a
copier, put it in Terri’s duplex next door, and sell copies. I
know

32. we can get customers because I’ve just seen them all at
Klecko’s.
If we 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 into
the copying business. They would call it JET Copies, named for
James, Ernie, and Terri. Their first step was to purchase a
copier.
They bought one like the one used in the college of business
office
at State for $18,000. (Terri’s parents provided a loan.) The
company
that sold them the copier touted the copier’s reliability, but
after they bought it, Ernie talked with someone in the dean’s
office
at State, who told him that the University’s copier broke down
frequently
and when it did, it often took between 1 and 4 days to get
it repaired.When Ernie told this to Terri and James, they
became
worried. If the copier broke down frequently and was not in use
for long periods while they waited for a repair person to come
fix
it, they could lose a lot of revenue. As a result, James, Ernie,
and
Terri thought they might need to purchase a smaller backup
copier 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 they
might lose if they did not have a backup copier. To get this
estimate,
they decided to develop a simulation model because they
were studying simulation in one of their classes at State.
To develop a simulation model, they first needed to know how

33. frequently the copier might break down—specifically, the time
between breakdowns. No one could provide them with an exact
probability distribution, but from talking to staff members in
the
college of business, James estimated that the time between
breakdowns
was probably between 0 and 6 weeks, with the probability
increasing the longer the copier went without breaking down.
Thus, the probability distribution of breakdowns generally
looked
like the following:
Next, they needed to know how long it would take to get the
copier repaired when it broke down. They had a service contract
with the dealer that “guaranteed” prompt repair service.
However,
Terri gathered some data from the college of business from
which
she developed the following probability distribution of repair
times:
Repair Time (days) Probability
1 .20
2 .45
3 .25
4 .10
1.00
Finally, they needed to estimate how much business they would
lose while the copier was waiting for repair. The three of them
had
only a vague idea of how much business they would do but
finally
estimated that they would sell between 2,000 and 8,000 copies
per day
at $0.10 per copy. However, they had no idea about what kind
of
probability distribution to use for this range of values.
Therefore, they

34. decided to use a uniform probability distribution between 2,000
and
8,000 copies to estimate the number of copies they would sell
per day.
James, Ernie, and Terri decided that if their loss of revenue due
to
machine downtime during 1 year was $12,000 or more, they
should
purchase a backup copier. Thus, they needed to simulate the
breakdown
and repair process for a number of years to obtain an average
annual loss of revenue. However, before programming the
simulation
model, they decided to conduct a manual simulation of this
process for
1 year to see if the model was working correctly. Perform this
manual
simulation for JET Copies and determine the loss of revenue for
1 year.
6 x, weeks
.33
f(x)
0
Problem #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:
1. 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.
2. In Excel, use a suitable method for simulating the interval

35. between successive breakdowns, according to the continuous
distribution shown.
3. In Excel, use a suitable method for simulating the lost
revenue for each day the copier is out of service.
4. 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.
5. 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).
6. 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.
There are two deliverables for this Case Problem, the Excel
spreadsheet and the written description/explanation.
Problem #2: Internet Field Trip
1. Research: Research at least six (6) information sources on
forecasting methods; take notes and record and interpret
significant facts, meaningful graphics, accurate sounds and
evaluated alternative points of view.
2. Preparation: Produce as storyboard with thumbnails of at
least ten (10) slides. Include the following elements:
o Title of slide, text, background color, placement & size of
graphic, fonts - color, size, type for text and headings
o Hyperlinks (list URLs of any site linked from the slide),
narration text, and audio files (if any)
o Number on slides clear
o Logical sequence to the presentation
Content: Provide written content with the following elements:
o introduction that presents the overall topic (clear sense of the
project's main idea) and draws the audience into the
presentation with compelling questions or by relating to the
audience's interests or goals.

36. o accurate, current
o clear, concise, and shows logical progression of ideas and
supporting information
o motivating questions and advanced organizers
o drawn mainly from primary sources
Text Elements: Slides should have the following characteristics:
o fonts are easy-to-read; point size that varies appropriately for
headings and text
o italics, bold, and indentations enhance readability
o background and colors enhance the readability of text
o appropriate in length for the target audience; to the point
Layout: The layout should have the following characteristics:
o visually pleasing
o contributes to the overall message
o appropriate use of headings, subheadings and white space
Media: The graphics, sound, and/or animation should
o assist in presenting an overall theme and enhance
understanding of concept, ideas and relationships
o have original images that are created using proper size and
resolution; enhance the content
o have a consistent visual theme.
Citations: The sources of information should:
o properly cited so that the audience can determine the
credibility and authority of the information presented
o be properly formatted according to APA style