Your recent business-to-business (B2B) implementation of a Web-based inventory tracking system is a huge success with your customer. However, the equipment continues to have reliability issues. Currently, failures seem to be exponentially distributed, with a mean of 2 days. The duration of the equipment failures is distributed as follows:
To determine the time between failures, use the following CPG:
Days until next failure = -2 ln(r1)
where:
r1 = a random number (0 ≤ r1 ≤ 1).
Simulate at least 1 month of business operations in Excel. Assuming that you lose $200/hr in business and another $500/hr in customer goodwill, determine the average cost per day and the average cost per equipment failure. Use the list below to develop the processes before conducting the simulation in Excel, Crystal Ball, or another software package:
• Draw a picture or a flowchart to help identify the processes
• Develop process generators
• Set up spreadsheet headings
• Develop simulation
• Capture output using a "what if" or "define forecast" table
• Post process the results a. What statistics could you obtain from this simulation that would be of interest to your management? b. What processes could you include to develop a more accurate model?