Week 2 Discussion Questions

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Mathematics

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1. Consider the following scenario and address the questions that follow.

Suppose your company wanted to determine the amount of sales of a new SUV model, called Lightning. The sales estimate would be based on the overall demand of various SUV model types. Overall demand is assumed to be normally distributed with a mean of 3 million units and standard deviation of 500,000 units. The share of demand that Lightning will take is assumed to be 4%. After running 1,000 simulated scenarios, a 95% confidence interval was constructed for the expected sales of Lightning units sold with limits of 93,048 and 146,964.

  1. If 1,000 new simulated scenarios were run, would you get the exact result? Explain why.
  2. Would the results be more stable if you ran 2,000 runs? Explain why.
  3. Is there a number of simulations that can be run so that the results do not change if you re-ran the simulations? Explain.


2. Reconsider the scenario presented in DQ 1 and address the questions that follow.

Suppose your company wanted to determine the amount of sales of a new SUV model, called Lightning. The sales estimate would be based on the overall demand of various SUV model types. Overall demand is assumed to be normally distributed with a mean of 3 million units and standard deviation of 500,000 units. The share of demand that Lightning will take is assumed to be 4%. After running 1,000 simulated scenarios, a 95% confidence interval was constructed for the expected sales of Lightning units sold with limits of 93,048 and 146,964.

  1. If a mean of 6 million units was used in the simulation, how would the confidence interval change? Explain.
  2. How would the confidence interval change if a standard deviation of 250,000 was used? Explain.

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Explanation & Answer

This one ..sorry

1. 1. Yes, the same results would be obtained. This is because the same sample size
n=1000 is used and thus it will generate the same standard error of the 95%
confidence interval. Thus it will have no effect on the confidence interval.

2. Yes, the resu...


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