To generate leads for new business, Gustin Investment Services offers free finan
ID: 374587 • Letter: T
Question
To generate leads for new business, Gustin Investment Services offers free financial planning seminars at major hotels in Southwest Florida. Gustin conducts seminars for groups of 25 individuals. Each seminar costs Gustin $3900, and the average first-year commission for each new account opened is $6000. Gustin estimates that for each individual attending the seminar, there is a 0.01 probability that he/she will open a new account.
Determine the equation for computing Gustin’s profit per seminar, given values of the relevant parameters. Round your answers to the nearest dollar.
Profit = (New Accounts Opened × $ ) – $
What type of random variable is the number of new accounts opened? (Hint: Review Appendix 16.1 for descriptions of various types of probability distributions.)
The number of new accounts opened is a binomial random variable with trials and probability of a success on a single trial.
Assume that the number of new accouts you get randomly is:
Construct a spreadsheet simulation model to analyze the profitability of Gustin’s seminars. Round the answer for the expected profit to the nearest dollar. Round the answer for the probability of a loss to 2 decimal places.
The expected profit from a seminar is $ and there is a probability of a loss.
Would you recommend that Gustin continue running the seminars?
Gustin should continue to run the seminars in their current format.
How large of an audience does Gustin need before a seminar’s expected profit is greater than zero? Use Trial-and-error method to answer the question. Round your answer to the nearest whole number.
attendees
Explanation / Answer
) Lets calculate slack per operation of each job first
Slack per operation = (Due date - Total remaining time) / Total remaining operations
Job Total remaining time Due date Total remaining operations Slack per operation
A 6 11 2 2.5
B 9 13 2 2
C 4 6 3 0.66
D 7 10 3 1
E 7 12 3 1.67
F 3 6 1 3
As per the Slack per operation scheduling rule, Lesser the slack per operation, higher the priority.
So in the ascending order of slack per operation, the scheduling order of jobs would be C-D-E-B-A-F
b. To find the mean lateness, refer to the below table. To calculate lateness, we start the operations in the order found above and calculate how delayed every operation is with respect to the due date.
Lateness = Due date - (Start time +Processing time)
The (start time + processing time) of preceding activity would be the start time of following activity
Mean lateness = Total lateness / Number of operations
Sequence Start Time Processing time Due time Lateness
C 0 4 6 -2
D 4 7 10 1
E 11 7 12 6
B 18 9 13 14
A 27 6 11 22
F 33 3 6 30
TOTAL 71
MEAN 11.833
c. To find the mean tardiness, refer to the below table. Tardiness is similar to lateness except for the fact that if lateness comes out to be negative, then tardiness is taken as zero
Tardiness = Due date - (Start time +Processing time) ; If this comes out to be negative then it should be taken as 0
The (start time + processing time) of preceding activity would be the start time of following activity
Mean tardiness = Total tardiness / Number of operations
Sequence Start Time Processing time Due time Tardiness
C 0 4 6 0
D 4 7 10 1
E 11 7 12 6
B 18 9 13 14
A 27 6 11 22
F 33 3 6 30
TOTAL 73
MEAN 12.167
d. As per the scheduling rule used in question a, the average number of jobs in the system at a point of time would be one
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