Free Essay

Jey Copies

In: Business and Management

Submitted By pjpflyers
Words 633
Pages 3
JET Copies
Patrick Prophet
Quantitative Methods – MAT 540
Dr. LaTasha Thompson
10/22/10

1. Write a brief description of how you implemented days-to-repair. When looking at the days it took to repair the copier, all that the JET Company had to go by was the average number of days that it took for the company to repair the copier if it broke down. The average was between 1 and 4 days to have the machine repaired. For this data, a probability distribution table was developed and programmed into excel. Once the probability table is loaded into excel, they are averaged into a random number range that generates numbers from 0.00 to 1.0. The system then generated an average number days it would take to repair the machine base to the random number generated. 2. Write a brief description of how you implemented the intervals between break downs. When the company looked at the number of intervals between breakdowns, there was no exact numbers to go by to create a probability distribution. What they did instead was to talk to the college who already owned one and go by their data. It was then determined that the average repair days would be between 0 and 6 days. This time the formula took the maximum number of and averaged it with the square root of the random numbers generated again from 0.00 to 1.0. Excel would then come up with the average number of days it would be between machine break down based on these numbers. 3. Write a brief description of how you implemented lost revenue. When looking at the lost revenue, the first thing I did was look at the average revenue that was generated per day. JET averaged between 2000 and 8000 copies per day at $0.10 per copy. What I did in this instance is took the median number which was 5000 and multiplied it by the cost per copy which ended up being $500.00 per day of lost revenue. After figuring out the lost revenue per day I averaged it in with the number of days that the copier would be out for repairs. The last revenue could be between $500.00 and $2,000.00 based on being out between 1 and 4 days. I then took the average cost per day and multiplied it by 365 days and then by 0.1 which was the probability of it being out for the max or 4 days to come up with $18,250.00. 4. Answer the questions in the case study. How confident are you in the answer? What are the limits of the study? They wanted to know if they should buy a back-up copier or not based on the fact that their revenue lost be $12,000 or more per year. Looking at the data based on the information available, the lost revenue based on the repair time is around $18,000.00. So, yes, they should purchase a back up copier. The data is based on probability and it’s not 100% accurate. However, there is a chance that the revenue lost could be above $12,000.00, so I would recommend that they purchase a back-up copier. Some of the limits to the study are that you are relying on information provided by one source for the break down data. There is no guarantee that the copier will break down as frequent as stated by the business office or that it will be repaired as fast. These numbers are just an estimate. The other part of this problem is the revenue. The JET Company is also assuming that they will be able to sell between 2000 and 8000 copies based on location.

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