BAN 313

I hereby declare that this is my own work.

Name: James Johnston Student number: 10117343 Due Date: 26 March 2012

Signature:

Question 1

Histogram for Profit Relative Frequency

0.35 0.3 0.25 0.2 0.15 0.1 0.05 0
<1000 1000 1500 1500 2000 2000 2500 2500 3000 3000 3500 3500 4000 4000 4500 4500 5000 5000 5500 5500 6000 6000 6500 6500 7000 7000 7500 7500 8000 >8000

Profit Intervals

Histogram of Quantity Lost Relative Frequency

0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 <1000 0 - 1000 1000 2000 2000 3000 3000 4000 4000 5000 5000 6000 6000 7000 7000 8000 >9000

Quantity of Loss

Question 2

Question 3

Question 4
Using the regression function, the following output was obtained for the generated data.

x1 = 36% x2 = 12%
This approach however is not very accurate because it only takes one instance of the data. It is only taking into account one total orange production scenario and due to the fact that it is very hard, to almost impossible for humans to influence exact fruit sizes it will be very difficult to execute this data practically, ie ensure the optimal x1 and x2 percentages are always met in production.

Question 5
Prince Orange of Limpopo is a small citrus farmer producing inter alia oranges. 2000kg.The oranges are sorted by size as Large, Medium and Small. The large orange are packed in boxes and exported to la Principaut d'Orange in France. The medium oranges are packed in bags for the Johannesburg Fresh Produce Market and the small oranges are sent to Tutti Frutti, the local juice factory. Making use of the given data and established distributions a Monte Carlo model was established using the row-column approach. The amount of oranges produced was calculated using =ROUND(NORMINV(RAND(),mean,stdev),0) and the large amount produced using =ROUND(NORMINV(RAND(),0.2*total amount,(1/3)*(0.2*total amount)),0) and the medium amount =ROUND(NORMINV(RAND(),0.4*total amount,(1/3)*(0.4*total amount)),0) and finally the small amount was just = total amount large amount medium amount. Next the amount sold was calculated, because there is a limit on the respective orange sizes, if the max amount for a respective size was reached then the surplus would contribute towards the next smaller size as well as the oranges deemed to be the correct size for that size class. This continues until the small size, after which the surplus is classed as quantity discarded. The profit was calculated by multiplying the respective size classes by their selling price and adding together as well as subtracting the loss for the surplus discarded oranges. Using the profit data generated and creating class intervals a relative frequency histogram was created, this histogram showed that the range with the greatest occurrence is the R6000 to R6500 profit range. The same process was the repeated for quantity discarded; in this instance it was found the greatest occurring range of discarded produce was less than 1000 oranges. Next in the data analysis was the setting up of a risk profile. Firstly the probability of making less than R5000 a day was calculated it ranged between 18% and 20%, and then a risk profile was generated.

The sensitivity of the daily profit for the values of the grading limits was investigated using a triangular distribution to induce variability into the grading limits. Using the given mode, min and max a table was drawn up for Large and Medium Oranges, the correlation coefficients were calculated and a tornado diagram was created. Finally the regression function in excel was used to determine the values of x1 and x2 that will maximize the Profit. The output produced shows that 36% large and 12% medium is optimal percentages.