Egress

Ski Jacket Production - Egress, Inc.

1. Describe the decision dilemma and discuss how to investigate this decision problem? How did Egress estimate the demand on ski jackets and why do you think this method is appropriate? What information needed to solve the problem (inputs) is available and what information is not available?

2. Construct a simulation model of ski jacket production that will enable you to assess the economic benefits to be obtained by selling ski jackets.

• Fit normal and triangular distributions to Estimated Demands. Discuss which distribution and why you should use to simulate Estimated Demands? Egress management believes that a normal distribution is a reasonable model for the unknown demand. What mean and standard deviation should Egress use for the demand distribution? What parameters you should use for triangular distribution?

• Build the model in such way so as to be able to vary the production quantity Q of the ski jackets

• Run this model using a production quantity of 7800, 10000, 12000, 14000, and 16000 of ski jackets and 1000 iterations.

3. Write management report (using the required format) suggesting and justifying an appropriate production quantity Q.

• Analyze the probability distribution plot of the simulated profits for various production quantities Q. What measure of central tendency will be appropriate for this case? Can you use standard deviation to estimate the potential upside and downside risk?

• Based on your analysis of the simulated profits, how many ski jackets should Egress produce to maximize expected profit? Explain your decision

• Create a histogram of profit at the selected production level Q and a histogram of profit when the production level Q equals mean demand. What is the probability of a loss greater than $100,000 for your selected production level?

• Embed the files with your simulation model and output into your...