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Jet Copies Assignment Mat 540

In: Business and Management

Submitted By Yeshikebede
Words 820
Pages 4
Jamie Banks, Ernie Moore and Terri Jones were students in State University. They always have to go far to make copies in Klecko’s copy center as there was no copying service nearby where they live by the south gate. One day while James was standing in line at Klecko’s copy center waiting for his turn, he realizes how much time they are wasting just by waiting as most students use the same machine to get copies.

James got an idea from other student who was waiting for his turn as James, if he can have a copy center by the Southgate where most of the students live, he easily can make lots of money. James shares his idea with friends Ernie and Terri and they liked the idea. Three of them decided to start the copying business and they would call it JET Copies named after the first letter of their name.

They bought a copier similar to the one used at the university for $18,000.00.They enquire about the reliability of the copier and came to know that the university copier broke down frequently and when it did it often require between 1 and 4 days to get it repaired.

As Repair time include the time portion during which technicians are working on a machine to effect repair starting from preparation, fault location, fault correction and final check time, it needs time between 1 and 4 days to get it repaired.

During this repair time they will always lose Revenue and they become worried. So they decided they might need back up copier to use in these repair time in order to avoid lost revenue. However before they decide to buy a backup copier they need some research and simulations model to estimate how much money they might lose if they don’t have back up copier.

James estimated the time between breakdowns is 0 and 6.They also wanted to know the cumulative time between breakdowns for one year. Next they need to know how many copies they anticipated not selling while the copier was down for repair. They have a vague idea of estimate they would sell between 2,000 and 8,000 copies a day at $ 0.10 per copy. Therefore, they decided to use a uniform probability distribution between 2,000 and 8,000 for number of copies lost during repair time.

In order to calculate and develop a stimulation model and to determine all these factors for JET copier I created a Random numbers in Excel functionality by using formula =RAND () in A3 and copy them by dragging from A3:A14 for 12 months. I did copy and paste special and select value in order to freeze those random number. Using the formula =6*SQRT (B3).

As per the results from the random number total around every 7 days the copier might breakdown in a total of 54 weeks in one year. The cumulative time between break down is calculated by adding D3:C4 and by dragging down for 12 months gave me a total of 53.65 approximately 54 weeks. number of copies lost was calculated by the formula Random between and choosing 2,000 the low and 8,000 for the high and drag for 12 months and freeze them all. This set of numbers will be used to calculate how many copies will be lost over the 12 month period.

The VLOOKUP (B3, Lookup, 2) was used to determine the number of days needed to repair the copier over the 12 month period. This was calculated by the VLOOKUP formula in column F and drag the first number for the 12 month which equated to 30 days on an average that it would take to have the copier repaired yearly.

JET copies wants to know how much revenue they would lose because the copier being down. By multiplying the random number of copies lost and repair time (days) for 12 month period which equates a total of 136,122 copies will be lost in 12 month period.

Finally to find how much revenue they will lose in the year I used the formula 0.10*G3 and drag the formula for the 12 month period. This gave me that JET copies would lose approximately $ 13,612.20 for that year.

As James, Ernie and Terri decided that if their loss of revenue due to machine downtime during 1 year was $ 12,000.00 or more they should purchase a back up copier.

After conducting the simulation in Excel and looking at the days to repair, interval between breakdowns and lost revenue I would recommend that JET copies purchase the backup copier based on this simulation. However I would recommend that this kind of simulation to be conducted for several times before they may reach the decision to purchase the backup copier due to those numbers changing after each simulation.

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