For step, one I generated a column of random numbers, which will help me to determine the weeks between breakdowns. I used the equation in excel =Rand( ). Next, I generated a column to determine the weeks between breakdowns. I used the formula in excel =8*SQRT(r) and used the previous mentioned randomly generated numbers. Once I had the randomly generated weeks, I created a column for the cumulative weeks to reach around the 52-week mark.
Step 2 I generated another column of random numbers, again using in excel =Rand( ). This random variable is used to generate days for repair. Using these generated numbers, I calculated the number of days the machine will be down for repair. In excel I used the equation =IF(F20.85,3,2)). This allows me to use the random numbers generated to determine the days of repair.
With step 3, I generated another column of random numbers. In excel I sued the equation =Rand( ). This new random number column will help me to determine the money lost per day. Next, I created a column that will actually generate the dollar amount of money lost. I used the equation =(400-200)*r=200. I used the mentioned random variable numbers for this new equation. I will use the generated number of days for repair to determine the cost of money loss per breakdown. In excel I use the equation =E2*G2. This uses the days of repair and multiplies this by the money per day lost
Finally, for step 4 I will show the yearly revenue lost. In this column, I will use the two previous columns and add together using a formula that will add the two previous cells together. In excel using the formula =I2+H3. Next, I ran the confidence intervals for the previous found data. For the Upper confidence level I used the excel formula =C17-(1.96) * (SQRT (COUNT (H2:H11))) and the lower confidence level I used the excel formula...
References: Taylor III, B. (2010). Introduction to Management Science. (10th ed.). Saddle River,
New Jersey: Pearson Education, Inc.
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