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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10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

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