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Mat 540 - Assignment 2

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Explanation: I conducted a random simulation with the information provided based on 52 base week calendar. Author B. Taylor stated “simulation can be applied to a number of problems that are too difficult to model and solve analytically” (Taylor, 2009). In this case the results were based on the use of one copy machine, intervals of breakdown, requiring 1-4 days for repair at a loss, at $0.10 cents a copy. Day 1: 20%, Day 2: 45%, Day 3: 25%, Day 4: 10% a total probability of 100%. The point of this case study is to simulate the break-down and repair process for one year to obtain an average annual loss of revenue. In addition the amount of time between breakdowns increases the probability of needing more costly repairs. Should the anticipated lost revenue exceeds $12,000.00 annually a backup copier will be purchased. We must keep in mind the most important factors of customer satisfaction and convenience, which is what, prompted the owners of JET to start their business in the first place. The first part of creating the probability of breakdowns relied upon information supplied by Jet Copies and their estimated probability of distribution. The nearby college staff had prior knowledge of the service provider’s timelines for repair because they had the same copier in the campus office. JET used their own estimated repair time to recreate a random repair time probability table using a range of days. As a result the average repair time was 3 days at a cost of $691 per day in potential profit loss due to the machine being out of service. The second part was to generate the intervals between successive amounts of breakdowns to the primary copier machine only. Using random numbers and the number of possible copies that could not be produced multiplied by $0.10 cents per copy. Each day between breakdowns that the machine is in working condition results in a positive earned revenue for JET. Therefore, based on the simulation the average number of weeks between the successive break downs was 4, with a average revenue of $10,464.00 The third part in calculating lost revenue for each day the primary copier is not working was based on a random number of copies between 2,000 and 8,000. Lost revenue was calculated by how many copies could not be sold multiplied by the days it took to repair the copier including the amount of copies that would have been made finally subtracting the cost for each copy not made. Total lost revenue was also based upon a 52 week simulation that resulted in an accumulative loss of $19,568.00. The average repair time was noted at 3 days with a loss of 4,815 copies during the first year. After review of this case study and simulation I conclude JET would need to purchase the backup copier to avoid substantial losses over $12,000.00. Without a backup method combined with the influx of new customers or repeat customers during peak times of college term papers and essays. It would be wise for JET to make the investment and purchase the backup copier.
The results of this stimulation given more trails and over a longer period of time will yield more consistent results; however it would not be best to rely upon this information alone. It should be used solely as an estimate and guide regarding the amount of loss in revenue that JET may experience in the future with their current line of business. There are limits within this study that can be traced to the unreliability of the preferred repair company, seasonal trends, customer demands, as well as the unexpected servicing needs for either copiers over time. JET can safely be assured the backup copier will prove to be valuable based on future growth. Like any normal business thinking outside of the box for future needs. Conducting real life simulations will help JET make thought out decisions and ensure they remain a reliable provider.

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