Question 5:I would recommend to management that they (circle one or highlight one)
should change to the new proposal of increased pricing. They will generate more profit.
should not change to the new proposal of increased pricing.
BIT 4434 MINI-PROJECT-II Fall 2020 Comp Simulation in Business https://canvas.vt.edu/ Rees Project m-p-II: Comparison and Recommendation Due Date: Wed 12/02/2020 at midnight at the end of that day. Submission: Submit a filled-in form: blank hand in m-p-II solution form.docx; this blank form is available on Canvas in this folder. Comparing Two Scenarios: I have built an Arena model for each of the following two scenarios. I have included the calculation of profit at the end of each day into each model for your use. Jill and Jack own a quick-stop convenience store that is open between the hours of 4 pm and 11 pm each day. The store has two exits (call them east and west), and Jill handles the east checkout counter, and Jack has the west. Customers arrive according to an exponential distribution with a mean of 1.03, and purchase either 1, 2, 3, or 4 items with 35%, 30%, 25%, and 10% likelihood respectively. The time they spend in the store is uniform between one-half and one and-a-half minutes for each item purchased. Customers then proceed to the shorter of the two lines; if the two lines are equal in length, customers flip a coin to select. Once a checkout counter is selected, checkout time is uniform between 0.65 and 1.25 minutes for each item. The doors to the store are closed at precisely 11:00 pm each evening, with customers already within the store allowed to finish shopping and checkout. Jill and Jack make $1.08 profit on each item purchased during the day. Jill feels that if they increase prices by 27 cents per item, they can increase profitability. Jack figures that with that rise in process, profitability will go up to $1.35 per item. The last time they raised prices, 20% of all customers who would have purchased more than one item balked. Those just purchasing one item were not affected by the increase. I have assumed that (1) Jack’s calculations are correct and that (2) customers will behave this time as they did last time prices were raised. I have placed on Canvas a simulation model of both the current-price and the increased-price scenarios. Your task is to make a recommendation of whether Jill and Jack should increase prices. _____________________________________________________________________________________ Specifics: Run both the “Current pricing” model I am furnishing, and the “Increased pricing” model I am also supplying, both on Canvas, for 10 replications. Answer the following questions by using the “blank hand in m-p-II solution form.docx” that I have furnished on Canvas. 1. What accuracy is there in each model? [Put your answer on the “blank hand in … form.”] 2. Calculate [showing work in the “hand in” file] the number of replications necessary to ensure 1% accuracy. Carry your calculation to two decimal places. 3. Run each model for the number of replications calculated to ensure 1% accuracy on both, but rounded up to the next fifty. (For example, if you calculate that 132 replications are needed for one model and 113 for the other, select the larger number (132) and then round up to the 2 next number divisible by fifty, namely 150.) Be sure to collect statistics in an output file for the runs. [If after making the additional runs you discover that you do not achieve desired accuracy, ignore that fact for this project; just go to the next step.] 4. Determine if the Increased pricing solution is statistically preferred at =.05. [Show your calculations/results in your “hand in” file by including a pasted-in screenshot of your “Paired- t Comparison of Means.”] 5. What do you recommend to management if their goal is profit maximization? [Highlight your recommendation in your hand in file.] m-p-II SOLUTIONName: Question 1: Current pricing: 10 reps results: Profit Sample mean 95% Confidence Interval Half Width Accuracy Increased pricing: 10 reps results: Profit Sample mean 95% Confidence Interval Half Width Accuracy Question 2: Current pricing: n0 = 10; n=n0(h0/h) 2 = replications. Round up to ______. Increased pricing: n0 = 10; n=n0(h0/h) 2 = replications. Round up to ______. Thus run both at ________ replications. Question 3 (not required to be handed in): Run both models with the Statistic module added to each. Question 4: ( Replace this old Quiz 2 screenshot with your own screenshot from the Output Analyzer. ) Circle one or highlight one: The means are statistically different. ___________________ pricing gives more profit. The means are NOT statistically different. Question 5: I would recommend to management that they (circle one or highlight one) · should change to the new proposal of increased pricing. They will generate more profit. · should not change to the new proposal of increased pricing. 2