Assignment Topic - Simulation
Problem 1: To generate leads for new business, Gustin Investment Services offers free financial planning seminars at major hotels in Southwest Florida. Gustin conducts seminars for groups of 25 individuals. Each seminar costs Gustin $3300, and the average first-year commission for each new account opened Is $6000. Gustin estimates that for each Individual attending the seminar, there Is a 0.01 probability that he/she will open a new account.
a. Determine the equation for computing Gustin's profit per seminar, given values of the relevant parameters. Round your answers to the nearest dollar.
b. What type of random variable Is the number of new accounts opened? (Hint: Review Appendix 16.1 for descriptions of various types of probability distributions.)
c. Assume that the number of new accounts you is?
Assume that the number of new accounts you randomly is:
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Simulation trial New Accounts
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1
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0
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2
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0
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3
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1
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4
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0
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5
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0
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6
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0
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7
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0
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8
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2
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9
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2
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10
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0
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11
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1
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12
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0
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13
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0
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14
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0
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15
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2
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16
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0
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17
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0
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18
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1
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19
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0
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20
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0
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21
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0
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22
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0
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23
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1
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24
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0
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25
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0
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Construct a spreadsheet simulation model to analyze the profitability of Gustin's seminars. Round the answer for the expected profit to the nearest dollar. Round the answer for the probability of a loss to 2 decimal places.
Would you recommend that Gustin continue running the seminars?
d. How large of an audience does Gustin need before a seminar's expected profit is greater than zero? Use Trial-and-error method to answer the question. Round your answer to the nearest whole number.
Problem 2: (Algorithmic) The wedding date for a couple is quickly approaching, and the wedding planner must provide the caterer an estimate of how many people will attend the reception so that the appropriate quantity of food is prepared for the buffet. The following table contains information on the number of RSVP guests for the 145 invitations. Unfortunately, the number of guests does not always correspond to the number of RSVPed guests.
Based on her experience, the wedding planner knows it is extremely rare for guests to attend a wedding if they notified that they will not be attending. Therefore, the wedding planner will assume that no one from these 50 invitations will attend. The wedding planner estimates that the each of the 25 guests planning to come solo has a 75% chance of attending alone, a 20% chance of not attending, and a 5% chance of bringing a companion. For each of the 60 RSVPs who plan to bring a companion, there is a 90% chance that she or he will attend with a companion, a 5% chance of attending solo, and a 5% chance of not attending at all. For the 10 people who have not responded, the wedding planner assumes that there is an 80% chance that each will not attend, a 15% chance each will attend alone, and a 5% chance each will attend with a companion.
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RSVped Guests
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Number of invitations
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0
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50
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1
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25
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2
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60
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No response
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10
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a. Assist the wedding planner by constructing a spreadsheet simulation model to determine the expected number of guests who will attend the reception. Round your answer to 2 decimal places.
b. To be accommodating hosts, the couple has instructed the wedding planner to use the Monte Carlo simulation model to determine X, the minimum number of guests for which the caterer should prepare the meal, so that there is at least a 90% chance that the actual attendance is less than or equal to X. What is the best estimate for the value of X? Round your answer to the nearest whole number.
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