CB2203 Data-Driven Business Modeling
Tutorial 4
Simulation by Hand
Please see the template provided for this week. You will run simulation by hand.
Question 1
Your company sells winter jackets. You receive two shipments of jackets during the selling season, and each
shipment contains 500 jackets. The first shipment arrives on November 1. The second shipment arrives on
January 1. Each jacket costs you $800 and you cannot refund unsold jackets.
Demand for jackets can also be divided into two periods. During November 1-December 31, we sell the
jackets for $1,500 each and the distribution of demand is as follows:
Demand during Probability
Nov 1-Dec 31
325 9
375 24
425 27
475 21
525 19
If we run out of inventory between November 1 and December 31, then the extra demand is lost.
If there are unsold jackets, we can sell them along with the jackets from the second shipment. However, if
your inventory on January 1 (remaining inventory + new shipment) is 550 or more jackets, then you will
need to rent extra storage for $60,000 total.
Starting on January 1, we reduce the selling price to $1,200 for all of the remaining jackets. The distribution
of demand during this period is as follows:
Demand during Probability
Jan 1-Feb 28
425 12
475 23
525 40
575 13
625 12
Any unsold jackets as of March 1 will be donated to a charity.
You should use the following random numbers in the order that they are presented:
Oct 30-Dec 31 78 6 63 36 18
Jan 1-Feb 28 31 54 16 42 25
Run a simulation over 5 days.
a. What is our average profit from November 1-February 28 (i.e. 4-months’ profit)?
Hint:
Step 1: What is your profit during Nov 1-Dec 31 in each run?
Step 2: What is your inventory on Jan 1? For example, if you have sold 400 jackets during Nov 1-Dec 31,
then how many jackets do you have on Jan 1?
Step 3: What is your profit during Jan 1-Feb 28 in each run?
Step 4: What is your total profit over the season in each run?
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CB2203 Data-Driven Business Modeling
Question 2
We operate flight ABC123 from Hong Kong to Seattle, which is scheduled to depart at 1:00AM (HKT) daily.
The flight is approximately 11 hours long, so it should arrive in Seattle at 12:00PM(HKT) if everything goes
according to schedule. Our passengers are then scheduled to take our partner carrier’s flight, DEF789, from
Seattle to Chicago, which is scheduled to depart Seattle at 3:00PM (HKT). The flight is approximately 4
hours long, so it should arrive at 7:00PM (HKT) if everything goes according to schedule. On our website,
the total flight time is advertised as 18 hours long (11 hours flight + 3 hours layover + 4 hours flight).
For the purpose of this assignment, we will ignore time zones and all times are in HKT. Boarding time is
equal to departure time.
Operations:
However, there is randomness in the presented times, and we would like to determine the average number
of hours that it takes for our passengers to arrive in Chicago after accounting for missed connections, etc.
1. Departure time of ABC123 from Hong Kong to Seattle – The actual departure time follows the
probability distribution:
Actual Departure Time Probability
1:00AM 50%
1:15AM 35%
1:30AM 10%
1:45AM 5%
2. Flight time of ABC123 from Hong Kong to Seattle – The actual flight time follows the probability
distribution:
Actual Flight Time Probability
11 hours 45 min 25%
12 hours 50%
12 hours 15 min 25%
3. Time to clear custom, go through security, and change gates between ABC123 and DEF789 –
Flights into USA have to clear custom at the airport of arrival. Passengers also have to clear security
and change gates. The amount of time between de-boarding ABC123 and arriving at the next gate
follows the probability distribution:
Actual Time to arrive at next gate Probability
1 hour 45 min 15%
2 hours 30%
2 hours 15 min 35%
2 hours 30 min 20%
4. Departure time of DEF789 from Seattle to Chicago – The actual departure time follows the
probability distribution:
Actual Departure Time Probability
3:00PM 25%
3:15PM 30%
3:30PM 35%
3:45PM 10%
If a passenger MISSES the connecting flight (i.e. arrive at the gate for DEF789 AFTER it departs), then the
passenger would need to take the next flight, DEF790. The next flight always departs at 6:00PM without
delays.
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CB2203 Data-Driven Business Modeling
5. Flight time of DEF789 and DEF790 from Seattle to Chicago – The actual flight time follows the
probability distribution:
Actual Flight Time Probability
3 hours 45 min 25%
4 hours 50%
4 hours 15 min 25%
You should use the following random numbers in the order that they are presented:
Departure time of ABC123 80 53 69 37 08
Flight time of ABC123 19 86 49 12 13
Time to clear custom 45 84 84 77 19
Departure time of DEF789 11 99 63 36 02
Flight time of DEF789/DEF790 4 51 02 72 26
Run a simulation over 5 days.
a. Determine the average length of a trip from Hong Kong to Chicago. The trip starts at 1:00AM
(HKT) because passengers arrive to board at that time.
b. What is the average delay? Delays are defined to be the time after 7:00PM, the intended arrival
time.
Hint:
Step 1: When do you arrive in Seattle?
Step 2: After clearing custom, when do you arrive at the gate for your second flight?
Step 3: Do you miss the next flight? Determine whether you take Flight DEF789 or DEF790.
Step 4: When do you arrive in Chicago?