Question

QUESTION 1 Use the information below to answer the following question(s). Consider the following spreadsheet for an outsourcing decision model. utsourcing Decision Model Data Manufactured in-house ixed cost Unit variable cost 60,000 130 Purchased from supplier Unit cost 10 165 12 Demand volume 13 14 Model 15 16 1,000 otal manufacturing cost Total purchased cost 18 19 Difference 20 Decision We assume that the production (demand) volume is normally distributed with a mean of 1,000 and a standard deviation of 100. For the unit cost, select the triangular distribution. It has a minimum value of $150, most likely value of $165, and a maximum value of $190. The number of trials per simulation is equal to 5,000 at a Sim. Random Seed of 1. Run the simulation and answer the following question(s) using the Risk Solver Platform. What is the value of mean absolute deviation obtained from the simulation results? O$5,885 O $10,893 S3,476 $7,443 O S

Answer 1

Simulation model is following:

1 Outsourcing Decision Model Simulation TriaRN Unit costVolume Total Mfg CosTotal Purchase Cost Abs Diff 186708 194434 191484 217375 181410 202214 207077 181825 207971 186306 192959 173697 195852 211887 189732 180594 182442 199890 186725 165810 200196 161717 24991 178391 16043 180343 11141 201788 15587 161173 20237 18152420689 201598 171754 10072 207729 160557 25749 166010 26948 147201 26496 179885 15967 18797723910 159978 29754 143255 37340 175213 171849 28041 151576 35149 142030 23780 183702 16494 182719 17765 198682 202423 3 Data 4 5 Manufactured in-house 6 Fixed cost 7 Unit Variable cost 2 0.694 3 0.863 4 0.457 50.696 60000 1211 9 Purchased from supplier 10 Unit cost 5480 7 0.861 8 0.955 90.944 10 0.388 11 0.253 12 0.529 13 0.681 14 0.198 1131 951 12 Demand volume 162 14 Model 15 16 Total manufacturing cost 17 Total purchased cost 1045 183591 157739 16 0.033 19 Difference 20 Decision 21 25852 7229 Purchase 18 0.157 19 0.050 20 0.760 1076 23 Mean Absolute Deviation 21680 1078 22 0.562 23 0.968 24 0.855 25 1078 200103 5433 26 207856

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