Explain how inventory and investment management are related to this example regarding Discount rate/cost, Warranty period, NPV,
Question:
Explain how inventory and investment management are related to this example regarding Discount rate/cost, Warranty period, NPV, etc.?
Step 1:
Simulation Model:
| Warranty costs for camera | |||||
| Inputs | |||||
| Parameters of time to failure distribution of any new camera (Gamma) | |||||
| Desired mean | 2.5 | ||||
| Desired stdev | 1 | ||||
| Implied alpha | 6.250 | ||||
| Implied beta | 0.400 | ||||
| Warranty period | 1.5 | ||||
| Cost of new camera (to customer) | $400 | ||||
| Replacement cost (to company) | $225 | ||||
| Discount rate | 8% | ||||
| Simulation of new camera and its replacements (if any) | |||||
| Camera | 1 | 2 | 3 | 4 | 5 |
| Lifetime | 2.442 | NA | NA | NA | NA |
| Time of failure | 2.442 | NA | NA | NA | NA |
| Cost to company | 0 | 0 | 0 | 0 | 0 |
| Discounted cost | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Failures within warranty | 0 | ||||
| NPV of profit from customer | $175.00 | ||||
Simulation Results:
Failures within warranty simulation results:
NPV of profit from customer simulation results:
Step 2: Week 5 Reflection
This week I learned what a simulation model is and how a distribution model is used in running simulations. I learned that a distribution can be continuous (meaning all continuous values in a distribution range) or discrete (meaning a discrete set of values in a distribution range). I learned how to use the RISK tools in excel to run a simulation which I captured the output above. I learned about the flaw of averages and how it impacts simulations. I also learned how the input variables distribution varies allow for multiple simulation runs or scenarios.
This week’s assignments took me about 8-10 hours.
| Output for NPV profit for Customer | |||
| NPV of profit from customer / 1 | |||
| Cell | Model!B23 | ||
| Minimum | ($402.35) | ||
| Maximum | $175.00 | ||
| Mean | $139.49 | ||
| Mode | $175.00 | ||
| Median | $175.00 | ||
| Std Dev | $90.04 | ||
| Skewness | -2.6712 | ||
| Kurtosis | 10.3668 | ||
| Values | 1000 | ||
| Errors | 0 | ||
| Filtered | 0 | ||
| Left X | ($33) | ||
| Left P | 5.00% | ||
| Right X | $175 | ||
| Right P | 95.00% | ||
| Dif. X | $207.92 | ||
| Dif. P | 90.00% | ||
| 1% | ($224.94) | ||
| 5% | ($32.92) | ||
| 10% | ($28.27) | ||
| 15% | ($25.48) | ||
| 20% | $175.00 | ||
| 25% | $175.00 | ||
| 30% | $175.00 | ||
| 35% | $175.00 | ||
| 40% | $175.00 | ||
| 45% | $175.00 | ||
| 50% | $175.00 | ||
| 55% | $175.00 | ||
| 60% | $175.00 | ||
| 65% | $175.00 | ||
| 70% | $175.00 | ||
| 75% | $175.00 | ||
| 80% | $175.00 | ||
| 85% | $175.00 | ||
| 90% | $175.00 | ||
| 95% | $175.00 | ||
| 99% | $175.00 | ||
Expert Answer:
Inventory managment Inventory There is a product of a company in which when an item has been made by ... View the full answer
Niebels Methods, Standards and Work Design
ISBN: 978-0073376318
13th edition
Authors: Andris Freivalds, Benjamin Niebel
