Analytical Decision Making: Simulation and Profitability Analysis

This project analyzes analytical decision-making processes through the use of simulation models to determine the optimal replacement strategy for a heating element. The assignment presents five different simulations, each representing a different replacement schedule (daily, every other day, every three days, every four days, and every five days). Each simulation calculates the expected net profit over a 60-day period, considering factors such as revenue generated from castings, replacement costs, and loss of goodwill due to downtime. The project assumes a consistent number of heating elements and casting volumes, allowing for a comparative analysis of the profitability of each replacement strategy. The solution calculates the net profit for each scenario, providing a comprehensive analysis of the financial implications of different decision-making approaches. The results of the simulations are presented in detailed tables, offering a clear understanding of the financial outcomes associated with each replacement strategy, culminating in recommendations based on the simulation results.

Running head: ANALYTICAL DECISION MAKING
Analytical Decision Making
Name of the Student:
Name of the University:
Authors Note:

1
ANALYTICAL DECISION MAKING
Contents
Problem 4 (Individual):....................................................................................................................2
Simulation 1:................................................................................................................................2
Simulation 2:................................................................................................................................9
Simulation 3:..............................................................................................................................16
Simulation 4:..............................................................................................................................21
Simulation 5:..............................................................................................................................28
Recommendation:..........................................................................................................................32
References:....................................................................................................................................34

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ANALYTICAL DECISION MAKING
Problem 4 (Individual):
Simulation 1:
In case the organization decides to replace the heating element after each day then the expected
net profit of the organization will be as following:
Day 1 replacement
Da
y
(A): Casting
received for
treatment
(B):
Revenue (A
x 200)
(C): Replacing cost when
replaced on Day 1
(D)Loss
of
goodwill
Net profit
{B-
(C+D)}
1 2000 400000 400000 800 (
800)
2 2000 400000 400000 800 (
800)
3 2500 500000 400000 1000 99
,000
4 2000 400000 400000 800 (
800)
5 2500 500000 400000 1000 99
,000
6 2000 400000 400000 800 (
800)

3
ANALYTICAL DECISION MAKING
7 2000 400000 400000 800 (
800)
8 2500 500000 400000 1000 99
,000
9 2000 400000 400000 800 (
800)
10 1500 300000 400000 600 (100,
600)
11 2000 400000 400000 800 (
800)
12 2000 400000 400000 800 (
800)
13 2500 500000 400000 1000 99
,000
14 1800 360000 400000 720 (40,
720)
15 2000 400000 400000 800 (
800)
16 2000 400000 400000 800 (
800)

4
ANALYTICAL DECISION MAKING
17 2000 400000 400000 800 (
800)
18 2500 500000 400000 1000 99
,000
19 1800 360000 400000 720 (40,
720)
20 2000 400000 400000 800 (
800)
21 2100 420000 400000 840 19
,160
22 2000 400000 400000 800 (
800)
23 2500 500000 400000 1000 99
,000
24 2000 400000 400000 800 (
800)
25 2000 400000 400000 800 (
800)
26 2000 400000 400000 800 (
800)

5
ANALYTICAL DECISION MAKING
27 2500 500000 400000 1000 99
,000
28 2000 400000 400000 800 (
800)
29 1500 300000 400000 600 (100,
600)
30 2500 500000 400000 1000 99
,000
31 2000 400000 400000 800 (
800)
32 2500 500000 400000 1000 99
,000
33 1500 300000 400000 600 (100,
600)
34 2000 400000 400000 800 (
800)
35 2000 400000 400000 800 (
800)
36 2500 500000 400000 1000 99
,000

6
ANALYTICAL DECISION MAKING
37 2000 400000 400000 800 (
800)
38 1800 360000 400000 720 (40,
720)
39 2500 500000 400000 1000 99
,000
40 2000 400000 400000 800 (
800)
41 1750 350000 400000 700 (50,
700)
42 2000 400000 400000 800 (
800)
43 2000 400000 400000 800 (
800)
44 2000 400000 400000 800 (
800)
45 2500 500000 400000 1000 99
,000
46 1750 350000 400000 700 (50,
700)

7
ANALYTICAL DECISION MAKING
47 2000 400000 400000 800 (
800)
48 2500 500000 400000 1000 99
,000
49 2000 400000 400000 800 (
800)
50 1800 360000 400000 720 (40,
720)
51 2000 400000 400000 800 (
800)
52 2000 400000 400000 800 (
800)
53 2000 400000 400000 800 (
800)
54 1500 300000 400000 600 (100,
600)
55 2000 400000 400000 800 (
800)
56 2000 400000 400000 800 (
800)

8
ANALYTICAL DECISION MAKING
57 1850 370000 400000 740 (30,
740)
58 2000 400000 400000 800 (
800)
59 1850 370000 400000 740 (30,
740)
60 2000 400000 400000 800 (
800)
Net profit / (loss) over 60 days period 550,
800
Net profit of the organization is expected to be $550,800 over the 60 days period if heating
elements are replaced at the end of each day.
Assumptions and notes:
I. It is assumed that that the number of heating elements within the organization is 500.
II. Total number of castings for treatment in 60 days will be (60 x 500 x 4.1) = 123,000,
i.e. due to mean value of 4.1 for each heating elements and total heating number of
heating elements expected to 500.

9
ANALYTICAL DECISION MAKING
III. Random number of castings have been used for different days however, keeping the
total number of castings to 123,000 keeping in mind the mean value of 4.1 for each
heating element with 500 total heating element1.
IV. Replacement cost is $800 per heating element.
Simulation 2:
In case the organization decides to replace the heating element after each alternative day, i.e. on
second day then the amount of profit expected to be earned by the organization will be as
following:
Day 2 replacement
Day (A): Casting
received for
treatment
(B):
Revenue (A
x 200)
(C): Replacing cost when
replaced on Day 1
(D)Loss
of
goodwill
Net profit {B-
(C+D)}
1 2000 400000 5600 394,40
0
2 2000 400000 400000 5600 (5,600
)
3 2500 500000 7000 493,00
0
4 2000 400000 400000 5600 (5,600
1 Arho Suominen, "Analysis Of Technological Progression By Quantitative Measures: A Comparison Of
Two Technologies" (2017) 27(8) Technology Analysis & Strategic Management.

10
ANALYTICAL DECISION MAKING
)
5 2500 500000 7000 493,00
0
6 2000 400000 400000 5600 (5,600
)
7 2000 400000 5600 394,40
0
8 2500 500000 400000 7000 93,00
0
9 2000 400000 5600 394,40
0
10 1500 300000 400000 4200 (104,200
)
11 2000 400000 5600 394,40
0
12 2000 400000 400000 5600 (5,600
)
13 2500 500000 7000 493,00
0
14 1800 360000 400000 5040 (45,040

11
ANALYTICAL DECISION MAKING
)
15 2000 400000 5600 394,40
0
16 2000 400000 400000 5600 (5,600
)
17 2000 400000 5600 394,40
0
18 2500 500000 400000 7000 93,00
0
19 1800 360000 5040 354,96
0
20 2000 400000 400000 5600 (5,600
)
21 2100 420000 5880 414,12
0
22 2000 400000 400000 5600 (5,600
)
23 2500 500000 7000 493,00
0
24 2000 400000 400000 5600 (5,600