AD 616 Boston University Enterprise Risk Analytics with R Studio Project

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AD 616

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BOSTON UNIVERSITY METROPOLITAN COLLEGE DEPARTMENT OF ADMINISTRATIVE SCIENCES AD 616: Enterprise Risk Analytics Assignment 4 What to submit? Please submit (i) a word file explaining in detail your answers to each question (you can use screenshots of the R to explain your answers) AND (ii) an R file with a separate tab for each question. For each question, make sure you develop the model and present the simulation results – the R file should be self-explanatory. The assessment of your work will include both the accuracy and the clarity of your word file and the R file. 1. A convenience store needs to make a decision of how many packages of California rolls prepare for tomorrow. A package of California rolls cost the store $2.00 and it sells for $6.00. Daily demand is normally distributed with a mean of 100 packages of California rolls and a standard deviation of 40 packages of California rolls. If there are leftovers at the end of the day, the store donates them. a. Use simulation optimization to find the optimal packages of California rolls that maximizes the store’s profit. b. Add a chance constraint to the model (VaR constraint) to make sure that there is a 90% chance that California rolls are available to the customers. Then, use optimization to find the optimal packages of California rolls that maximizes the store’s profit. 2. Marcy Hotel is a boutique hotel in Boston downtown area. The operations manager, Jenna, needs your help to decide how many rooms (of a particular type) to book for a day. The nightly stay in these rooms is $200 and the hotel has 100 of those rooms. The data shows that some customers do not show-up. To protect against no show-ups, Jenna is considering to book more than 100 rooms per night. Although this practice allows Jenna to utilize each room available as much as possible, it comes with a risk. The risk is that if Jenna books more than 100 rooms and if more customers than expected show-up, then some customers will not be able to stay at the hotel even though they made a reservation. To protect those customers, Marcy Hotel is providing a compensation of 120% of the booking price paid by the customer. Also, any no show-up customer Is refunded 30% of the booking price paid by the customer. How many rooms should Jane book in a day to maximize its expected revenue. Answer this question by developing a simulation optimization model. In your model, assume that the number of no-shows is lognormally distributed with a mean of (0.2*number of rooms booked) and standard deviation of (0.05*number of rooms booked). AD616 Assignment 4 Yu Wang Question 1.a To come up with the number of rolls that need to be prepared for the highest profit, we can calculate the number of demand under the circumstances when profit reach the highest. Here are is ar stu ed d vi y re aC s o ou urc rs e eH w er as o. co m the known values. It should be noticed that the daily demand of California rolls must be positive and integers, and I set the demand parameter from 0 to positive infinity and then round the results. Based on the sh Th model shown below, the convenience store should prepare 117 per day. This study source was downloaded by 100000765850527 from CourseHero.com on 06-06-2021 11:53:25 GMT -05:00 https://www.coursehero.com/file/68427963/AD616-Assignment4docx/ Question 1.b From the optimization model shown below, I suggest the convenience store should prepare 151 California rolls to make sure that there is a 90% chance that California rolls are available to the sh Th is ar stu ed d vi y re aC s o ou urc rs e eH w er as o. co m customers. This study source was downloaded by 100000765850527 from CourseHero.com on 06-06-2021 11:53:25 GMT -05:00 https://www.coursehero.com/file/68427963/AD616-Assignment4docx/ Question 2 At first, I set the number of rooms sold as 110 to have a basic idea of the whole situation. And we Th is ar stu ed d vi y re aC s o ou urc rs e eH w er as o. co m can see that 95% of the results of revenue are above $21,000 sh Then I developed the optimization model. From the graphs shown below, I came up with the conclusion that it will be best to sell around 162 rooms per day, and by doing so, the hotel can reach the highest profit of $23,000. (Please see the code in R file “AD616_Assignment4_Q2_Yu Wang, as it is too long to show them here) This study source was downloaded by 100000765850527 from CourseHero.com on 06-06-2021 11:53:25 GMT -05:00 https://www.coursehero.com/file/68427963/AD616-Assignment4docx/ is ar stu ed d vi y re aC s o ou urc rs e eH w er as o. co m Th Besides, I also tried to optimize revenue over the uncertainty of the number of no shown-up sh customer on the average cases, and it shows the highest profit we can get is $23382 and we can reach this goal by selling 146 rooms. (Please see the code in R file “AD616_Assignment4_Q2_Yu Wang, as it is too long to show them here) This study source was downloaded by 100000765850527 from CourseHero.com on 06-06-2021 11:53:25 GMT -05:00 https://www.coursehero.com/file/68427963/AD616-Assignment4docx/ This approach is flawed compared to the first one, as We would like to optimize the revenue for each possible sales scenario and then make the decision based on the overall objective. In sh Th is ar stu ed d vi y re aC s o ou urc rs e eH w er as o. co m conclusion, the hotel should sell 162 rooms in a day to maximize the revenue of $23,000. This study source was downloaded by 100000765850527 from CourseHero.com on 06-06-2021 11:53:25 GMT -05:00 https://www.coursehero.com/file/68427963/AD616-Assignment4docx/ Powered by TCPDF (www.tcpdf.org)
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