Project risk management

Monte Carlo Simulation Coursework and Report

Please note, the Monte Carlo simulation is to be done in a group and is worth 30% of
the total mark.
The final report is an individual effort and is worth 10%. For the simulation, every
group will use a unique set of values (refer to the table at the end of this document).

Coursework Part A: How Many Souvenir Books to Produce?

The first part of the coursework concerns a decision about a production batch size for
a major event next summer. “Taking place over the weekend of Saturday 14 th and
Sunday 15th August 2021 at INTU BRAEHEAD, Film & Comic Con Glasgow promises a
fun weekend where you can meet celebrity guests, browse the many trader stalls, get
hard to find items and enjoy some cosplay, a must for all fans of pop culture.”
The “Movie Merchandise Company” plans to produce a batch of souvenir books to
sell during the weekend of Comic Con. The book has been designed and priced, but
it has not yet been decided how many to produce. The company want to choose the
batch size that will maximise their profits. In order to help them make the right
decision they have asked you to perform a Monte Carlo simulation analysis of the
expected profits. They have provided you with the following information:
It is known that there will be fixed production costs of £10,000.
There will also be variable production costs. For each book the company produce
there will be an additional cost of £5.
The revenue from each book sold will be £12.
After doing some extensive market research it predicts that customer demand for the
book will be normally distributed with a mean value of VARIABLE 1 and a standard
deviation of VARIABLE 2.
Remember, the company cannot sell more books than it has produced – whatever
the demand. It is also assumed that there is no cost for disposing of any surplus
books that are not sold.
Due to a number of manufacturing constraints the options for the production batch
size are either VARIABLE 3 or VARIABLE 4. That is the decision the company has to
make and about which you have to advise them.
On the basis of your simulation analysis, you should provide the necessary
information for the company to make its decision. In particular, what are the expected

Page 1 of 5
profits for each production batch size? You should consider the key statistics (mean,
maximum profit etc) and a graph of the frequency distribution.

Coursework Part B: Predict the Project Duration Time

The company in part A also has to plan when to start this particular project in order to
have the books ready in time for Comic Con which will take place during August
2021. The books will be on sale at INTU BRAEHEAD when the event is taking place –
but not available anywhere else or at any other time. Bear in mind, the company has
many other projects in progress, and does not have much space to store finished
goods before they are sold.
It has drawn up a project plan for the various stages of this project – including
manufacturing, packaging and marketing. They have identified the 10 main activities
and the dependencies between them. They have also predicted the duration time (in
days) for each activity. In each case, duration times are best modelled by a Normal*
probability distribution with the given means and standard deviations. This
information is in the table below:

Estimated Duration (Days)

Activity Depends on
Mean Standard Deviation
A – 20 5
B A 24 6
C A 28 7
D B, E 20 5
E C VARIABLE 5 VARIABLE 6
F C 24 6
G F 20 5
H D 24 6
I H, G 16 4
J I 20 5
Your task is to find the expected duration of the whole project and then help the
company decide when it should start. There is a file on Moodle (Souvenir Book
Project) that has been set up to help you.
*A sample of manufacturing times were collected from a number of similar projects
and are shown in Appendix A. You may want to analyse this data and discuss
whether the choice of the Normal distribution is really suitable.

Coursework Deliverables: Presentation and Spreadsheet

Presentation. Each group should prepare a video recorded powerpoint presentation
(between 10 and 12 minutes) about the outcomes of their risk assessment. This
should be directed towards the company and help them make the decisions they
have consulted you about (preferred batch size and production start date). In
preparing your presentation you should pay particular attention to the issue of risk
communication; consider carefully how it would be best to present your findings to
the company. Think about the best use of words, numbers, tables, graphs, diagrams,
labels – or something else? Will your results be correctly understood?

Page 2 of 5
Spreadsheet. Your group should submit a spreadsheet showing your calculations for
Parts A and B. (Calculations of expected profits for both batch sizes and project
duration time). The spreadsheet should also include a separate sheet that describes
briefly how you have reached your conclusions. It should also include a brief section
where you discuss technical issues such as the choice of the correct probability
distributions and the number of iterations or repetitions to run; do you think your
models and results are realistic? You might also include some brief comments about
any extreme or unusual results.

Individual Report: Qualitative versus Quantitative Risk Assessment

Once your group has finished the coursework you should write (individually) a short
report reflecting on the 2 different types of risk assessment you have studied in this
module – qualitative and quantitative. What do you think are the similarities and
differences between the two approaches? What are their key advantages and
disadvantages? You should consider the application of risk management in your
chosen discipline (project or supply chain management) – what would be some of the
practical issues in that discipline when conducting risk assessments. (Word count
approximately 500)
The following is a summary of what files should be submitted via Moodle/Turnitin,
and how they will be marked:

Group Coursework Format Marks

Calculation of expected profits for both Excel spreadsheet 15
batch sizes. Calculation of expected project (or equivalent)
duration time. Stats and graphs for both
parts. Technical issues – probability
distributions, number of repetitions etc.
Presentation of your results to the company. Powerpoint slides 15
Discussion about recommended batch size. (or equivalent)
Discussion about recommended start date. MP4 video
Any other issues. (or equivalent)
Individual Report
Comparison of qualitative and quantitative Word report 10
risk assessments. (approx. 500 words)

Presentation: Slides, spreadsheet and recording due no later than 4pm on 20th
August 2021. Individual Report submission: 4pm, 11 26th August 2021 - via
Moodle/Turnitin.
Please make sure you have re-read the assessment and group work guidelines
from the qualitative analysis course work.

Page 3 of 5
Appendix A – Manufacturing Times from Previous Projects
A sample of manufacturing times (days) from previous projects (P1–P5).

P1 P2 P3 P4 P5
A 28.2 36.0 34.1 30.8 33.4
B 37.0 34.0 38.9 29.8 28.7
C 37.0 31.1 28.1 34.2 29.7
D 28.5 30.4 32.5 35.3 29.0
E 33.0 33.7 45.0 30.0 25.7
F 31.4 42.0 31.2 26.3 26.3
G 30.4 36.4 35.3 43.0 41.2
H 30.3 37.0 30.6 31.9 32.0
I 38.0 42.0 33.4 35.0 31.9
J 33.8 28.0 32.4 27.5 35.6

Page 4 of 5
Appendix B – Coursework Unique Data Values
The following table gives the values reserved for each of the numbered coursework
groups. If you have not already added your name to the group list on myUWS, please
do so in order to determine your group number and corresponding values.

Group Variable Variable Variable Variable Variable Variable

No. 1 2 3 4 5 6
1 5000 1000 8000 4500 26 5
2 5200 600 5000 6500 26 5
3 4800 1200 5000 7000 27 6
4 5200 800 7000 5000 24 6
5 4800 1000 7000 4500 25 4
6 5200 600 4500 6000 26 5
7 5000 1000 4000 7500 28 7
8 4800 1000 4000 6500 28 7
9 5200 1200 8000 5000 24 6
10 5200 1200 5500 7500 25 4
11 5200 1000 7000 4500 25 4
12 5200 1000 5000 7500 27 6
13 5200 800 4000 6500 28 7
14 5000 800 6500 5000 24 6
15 5000 1200 4000 6000 24 6
16 4800 600 4500 6000 26 5
17 5000 800 6500 4500 25 4
18 4800 1200 4500 7000 24 6
19 5000 600 4000 5500 27 6
20 4800 800 5000 6500 26 5
21 5000 600 6000 4500 28 7
22 4800 800 5000 6000 27 6
23 4800 600 4000 6000 28 7
24 5000 1200 7000 4000 25 4

Page 5 of 5