Problem set 3: Monte Carlo simulation

Always use excel/spreadsheets when solving the following problems.

1. Mr. Yanu goes to the campus using the commuter line. The travel time for each part of his
journey is as follows:
No Journey part Travel time
1. From his house to Tebet Station Uniform[15, 30] minutes
2. Riding Kereta from Tebet Station to UI Station Normal(mean=60, SD=15)
minutes
3. From UI station Uniform[10,20] minutes

If the morning class starts at 08.00, what is the latest appropriate time so that Mr. Yanu not
late coming to the class with a 95% probability?
Use Monte Carlo simulation in an Excel file with at least 1,000 experiments!

2. A steel workshop has a production line with three machines that run in series. Due to a
high-temperature operation, heating elements need to be replaced frequently. The lifetime
of the heating element follows a normal distribution with mean 1000 hours and a 100-hour
standard deviation. If the heating element is broken, the production line needs to be shut
down for 30 minutes. If the cost for each heating element is 10$ and the shutdown of the
production line costs the workshop 500$/hour, compare two replacement policies, i.e.,
replace one-by-one and replace all-at-once.
Use Monte Carlo simulation in an Excel file with at least 1,000-hour experiments!

3. A jewelry workshop wants to estimate the volume needed for making a mold that can be
described by the volume enclosed when the curve 𝑦 = √𝑥 over the interval 4 ≤ 𝑥 ≤ 6 is
rotated about the line 𝑥 = −2. Do not evaluate the integral.
Use Monte Carlo simulation in an Excel file with at least 1,000 experiments!

4. A major repair on the suspension system of a 5-year-old car cost $2000 because the
warranty expired after 3 years of ownership. The cost of periodic maintenance has been
stochastic in nature, with an average of $800 and a standard deviation of $100 every 2
years. If the owner donates the car to charity after 8 years of ownership, what is the
equivalent annual cost of the repair and maintenance in the 8-year period of ownership?
Use an interest rate of 8% per year, and assume that the owner paid the maintenance cost
immediately before donating the car in year 8.
Use Monte Carlo simulation in an Excel file with at least 1,000 experiments!

5. A company has fixed costs of $600,000 and produces one product with a selling price of
$144.00 and a variable cost of $84.00 per unit. The maximum factory capacity is 40,000
units, and it anticipates selling with sales according to a normal distribution with an average
 of 30,000 units and a standard deviation of 300 units. How much profit will they make at
the present level of operation?
Use Monte Carlo simulation in an Excel file with at least 1,000 experiments!

6. How much is $30,000 today worth 5 years from now if the annual interest rate is stochastic
with uniform probability 10-13%?
Use Monte Carlo simulation in an Excel file with at least 1,000 experiments!

7. The annual usage of an item is according to a normal distribution with mean 1,000 units and
a standard deviation of 100 units. Ordering cost is $10.00 per order, and the carrying cost is
$0.50 per unit per year. Determine the optimal order quantity for this item. How many
orders will be placed during the year? How many days will there be between consecutive
orders? (Assume 250 working days in a year).
Use Monte Carlo simulation in an Excel file with at least 1,000 experiments!