VENDING MACHINES – MONTE CARLO SIMULATION (HOMEWORK ASSIGNMENT 3) Case Solution & Answer

VENDING MACHINES – MONTE CARLO SIMULATION (HOMEWORK ASSIGNMENT 3) Case Solution

Analysis

            Finally, the SimVoi Simulation has been used in order to perform the simulation for both the vending machines uncertain inputs independently and generate the mean cost per month for both the machines. The number of the trials had been set to 500. The input variables chosen are the sales lost, breakdowns, repair duration and the output variable is the cost per month. The summary for the simulation results of the Ultra Vend 3000 machine is as follows:

SimVoi 3.05 Univariate Summary
	COST PER MONTH	Sales Lost	Breakdown	Repair Duration
Mean	15.46746486	14.9094	0.6600	1.5953
St. Dev.	23.83651404	2.7657	0.7704	0.9694
Mean St. Error	1.066001315	0.1237	0.0345	0.0434
Skewness	+1.742	+0.116	+0.668	+0.283

             It could be seen that the average cost per month would be $ 15.46 per month if the new venture designs the Ultra Vend 3000 vending machine for its customers. Similarly, the summary results for the Vendomatic Deluxe machine are shown as below:

SimVoi 3.05 Univariate Summary
	COST PER MONTH	Sales Lost	Breakdown	Repair Duration
Mean	10.58173439	14.7005	0.2760	2.6117
St. Dev.	21.02567481	2.8618	0.5180	0.8464
Mean St. Error	0.940296763	0.1280	0.0232	0.0379
Skewness	+2.075	+0.154	+1.717	+0.420

 It could be seen that the average cost per month would be $ 10.58 per month if the new venture designs the Vendomatic Deluxe vending machine for its customers. Therefore, the cost per month for this machine would be lower as compared to the Ultra Vend 3000 machine. Moreover, the standard deviation for this machine for cost per month is also lower as compared to Ultra Vend 3000.

Recommended Course of Action

            It is recommended for the management to design Vendomatic Deluxe machine in the new venture for its customers. This course of action is the best course of action and it is least risky for the company and its customers. If the management moves ahead with this option, then it would surely create value for the business and wealth for its shareholders……………….

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