Problem 1: (10 points) Solve problem 11 of Chapter 13

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A B C D E F Shaft Radius 1.001 Triangular(min,likely,max) 1.000 1.001 1.002

Bushing Radius 1.002 Normal(mean,st.dev.) 1.002 0.001

Clearance 0.0010

Problem 2: (20 points) Solve problem 16 of Chapter 13

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10 11 12 13 14

BA C D E Purchase Price $100

Selling Price $150

Order Quantity 14 Value Probability

Demand 14 Discrete (Custom) 10 0.05 11 0.1

Revenue $2,100 12 0.1 Purchase Cost $1,400 13 0.15

Total Profit $700 14 0.2 15 0.15 16 0.1 17 0.1 18 0.05

Problem 3: (20 points) Solve problem 18 of Chapter 13

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BA C D E Data

Our Project Cost ($million) 5.000 Our Bid Cost ($million) 0.050

Competitor Bids Competitor 1 Competitor 2 Competitor 3 Competitor 4 Bid ($million) 6.083 6.083 6.083 6.083

Distribution Triangular Triangular Triangular Triangular

Competitor Distribution Parameters (Proportion of Our Project Cost) Minimum 105% 105% 105% 105%

Most Likely 120% 120% 120% 120% Maximum 140% 140% 140% 140%

Competitor Distribution Parameters ($millions) Minimum 5.250 5.250 5.250 5.250

Most Likely 6.000 6.000 6.000 6.000 Maximum 7.000 7.000 7.000 7.000

Minimum Competitor Bid ($million) 6.083

Our Bid ($million) 5.700

Win Bid? 1 (1=yes, 0=no)

Profit ($million) 0.650

Problem 4: (25 points) Solve problem 22 of Chapter 13

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A B C D E F Airline Overbooking

Discount Data Reservations

Seats Available 112 to Accept 75 Fixed Cost $10,000

Discount Fare $150 Total Full Coach Fare $400 Reservations Cost of Bumping $600 to Accept 120

Discount Ticket Demand (Triangular) Minimum 50 Discount-Fare Demand 96.66666667

Most Likely 90 Rounded 97 Maximum 150 Tickets Purchased 75

Probability to Show Up 95% Number that Show 71.25

Full-Coach Ticket Demand (Uniform) Full Coach Demand 50 Minimum 30 Rounded 50

Maximum 70 Tickets Purchased 45 Probability to Show Up 85% Number that Show 38.25

Number Denied Boarding 0 Number of Filled Seats 109.5

Revenue (Discount Fare) $11,250 Revenue (Full Coach) $15,300

Bumping Cost $0 Fixed Cost $10,000

Profit $16,550.00

Problem 5: (25 points) Solve problem 23 of Chapter 13

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BA C D E F G H I J Initial Annual

Stock Fund $3,000 $2,000 Bond Fund $3,000 $2,000

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Stock Fund Investment $5,000 $2,000 $2,000 $2,000 $2,000

Stock Fund Start $5,000 $7,400 $9,992 $12,791 $15,815 $17,080 Mean St. Dev. Stock Fund Return (%) 8% 8% 8% 8% 8% Normal 8% 6%

Stock Fund End $5,400 $7,992 $10,791 $13,815 $17,080

Bond Fund Investment $5,000 $2,000 $2,000 $2,000 $2,000 Bond Fund Start $5,000 $7,200 $9,488 $11,868 $14,342 $14,916

Bond Fund Return (%) 4% 4% 4% 4% 4% Normal 4% 3% Bond Fund End $5,200 $7,488 $9,868 $12,342 $14,916

Total $31,996

Problem 1: (10 points) Solve problem 11 of Chapter 13
Total:
$8.99