Free Essay

Submitted By dqzc

Words 679

Pages 3

Words 679

Pages 3

Strayer University

MAT540: Quantitative Methods

October 29, 2013

JET Copies is a company designed to alleviate a longer commute and longer wait time, and possibly have a more cost efficient method for the college students to make copies. The three students James, Ernie, and Terri decided to go into business together with a copying business initiative.

Considering what was ahead of the new business, for example, possible machine downtime and days to repair the copier, they had to determine the average number of days that it would take for them to acquire a repair team to fix the machine in the event that it broke down. As discovered, the average time for repair was between one and four days. In order to calculate the average, a probability distribution was developed using Microsoft Excel. From there, the cumulative probability was obtained by adding the probability, P(x), from the previously itemized probabilities where the cumulative summation of a probability is always equal to one (1) or 100%. A random number formula, =RAND(), was plugged into the Microsoft Excel desired cell, in this situation, (H4), which generated a random range of numbers that are greater than or equal to zero and less than one.

The interim time between breakdowns were achieved simply by soliciting the experience several staff members in the college of business who were familiar with frequency of the copier’s inconsistent behavior. It was estimated that the time between breakdowns was probably between zero and six weeks. Using the continuous probability distribution formula, x=6√r1, where six is the maximum number of weeks in this study and r1 is the random number. The amount of breakdowns were achieved by attaining the result of the cumulative time after determining that the number of breakdowns needed to assess the case study of approximately one year, or more accurately, 52 weeks. JET Copies projected that they would sell between 2000 and 8000 copies per day at $0.10 per copy. The loss of revenue was calculated by choosing the average number between 2000 and 8000—5000. Multiplying 5000 by the cost per copy at $0.10 per copy, would underperform a $500.00 loss of revenue per day. On average, their loss of revenue per year would compute to around $15,500.

The way of putting all the components together within a Microsoft Excel spreadsheet, was by attaining the random number range for the probability distribution. Setting up a simulation with the essential formulas in the spreadsheet will assist in computing the answers required to provide the company with a ballpark figure so they are able to proceed with a productive copying business.

I am confident that my answer is a good one due to its ability to support itself through calculation. The formulas and instructions that were given to process the results backed my answer thoroughly to complete the next step, nevertheless, being completely based on random numbers generated by the computer, it supplied me with an inkling of what it would require to move forward in the direction of an unforeseeable challenge of starting a business. The case study was clear and concise providing me with the ability to complete the problem with ease. After double checking my answer, I am very confident that my answer is a good one.

In this study, a few limits were observed. JET Copies initially spent $18,000 on a piece of equipment that would ultimately cost the company on average, $59,000 a year in repair expenses to maintain it; that’s roughly one month per year, that the copier is broken down. According to this particular case problem, the loss of revenue exceeded $12,000 by $3,500. Realizing that this surpasses their limit, they should purchase the $8,000 smaller backup copier to use when the main copier is inoperable. JET Copies revenue is dependent on an operable and reliable copy machine. Overall, it was a suitable idea, however the frequency of breakdowns and the downtime for repair results in a bad business plan.

Free Essay

...Introduction This paper will answer the question whether or not JET Copies, a new copier company established by three friends, should purchase a smaller copier as a backup for the primary copier when the primary copier is not in service. The owners of the company have purchased a primary copier similar to the one in the dean’s school of business. During making their decision to purchase, the owners received positive information from the seller regarding the copier reliability. The price of the primary copier is $12,000. Terri, one of the owners of JET Copier, received a loan for her family to purchase the copier. After talking to someone from the dean’s office of business, JET Copies discovered that the copier is not as reliable as they thought. To prevent loss of revenue, JET Copies uses several simulations in an attempt to estimate the loss of revenue—repair days, time between breakdowns, and number of copies per day. The price of the second copier is $8,000. If revenue lost for a year is greater than or equal to $8000, then JET should purchase. Below are my calculation after setting up and running simulations based on the information provided within the case study. 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. The owners of JET Copies decided to purchase a copier similar to the one used in the college of business at State. The company they......

Words: 674 - Pages: 3

Free Essay

...JET Copies Case Problem Assignment #1 MAT540, Strayer University Assignment#1: JET Copies Case Problem According to the discrete distrubution, the number of days (y) needed to repair the copier is as follows (where “R2” is a random value in the excel sheet between and 0 and 1): 0 < R2 < .2, then it takes 1 day .2 < R2 < .65, then it takes 2 days .65 < R2 < .9, then it takes 3 days .9 < R2 < 1, then it takes 4 days James estimated that the time between break-downs was probably between 0 and 6 weeks, with the probability increasing the longer the copier went without breaking down. For simulating the interval between successive breakdowns: f(x) = x/18, 0 ≤ x ≤ 6 weeks where x= weeks between break-downs f(x) = x²/36, 0 ≤ x ≤ 6 weeks where x= weeks between break-downs f(x) = random number1 (R1) = x²/36 x = 6*sqrt(R1) 3. For simulating the lost revenue every day that the copier is out of service, select a random number (R3) between 2000 and 8000, since it is estimated that they would see between 2000 and 8000 copies a day. They will charge $0.10 per copy. Therefore, the lost revenue for each day the copier is out of service is equal to R3*.1*repair time. The amound of revunue lost is approxiamtely $12,934.80. Please see the attached excel sheet. In order to estimate the revenue lost for the one year of operations the simulation has been performed. The estimates indicated that the copies sales were between 2000 to 8000......

Words: 522 - Pages: 3

Free Essay

...Quantitative Methods -MAT 540 JET Copies Case Problem Assignment #1 Days-to-repair Terri was able to gather data from the college which allowed them to develop a table for the probability distribution of the wait for repair services on JET’s copier. To model the probability of wait times in the JET Copies simulation, the JET partners generated a random number representing the probability of an occurrence of a breakdown. They then programmed a VLOOKUP function to match this breakdown probability to the corresponding “Repair Time in Days” column of the table. The result is the simulated time to get repair service for each breakdown occurrence. Interval between breakdowns The James, Ernie, and Terri purchased a copier just like the one used at their college office. When Ernie talked with someone in the dean’s office at State, he was told that the University’s copier broke down frequently often for 1 to 4 days. The partners became worried that their machine would also frequently break down. Although they could not get an exact probability distribution, James was able to determine that breakdowns occurred between 0 and 6 weeks apart. The probability of a breakdown increased as time passed. To model the time between breakdowns in their simulation, JET created a list of random numbers. Next, they applied the probability function f(x) = 2x/a2 0≤ x ≤ a. For this situation, the formula used is x = a √r. Since James estimated breakdowns occur zero to six weeks apart...

Words: 862 - Pages: 4