Assignment #1: JET Copies Case Problem
Strayer University
MAT540: Quantitative Methods
October 29, 2013

JET Copies is a company designed to alleviate a longer commute and longer wait time, and possibly have a more cost efficient method for the college students to make copies. The three students James, Ernie, and Terri decided to go into business together with a copying business initiative.
Considering what was ahead of the new business, for example, possible machine downtime and days to repair the copier, they had to determine the average number of days that it would take for them to acquire a repair team to fix the machine in the event that it broke down. As discovered, the average time for repair was between one and four days. In order to calculate the average, a probability distribution was developed using Microsoft Excel. From there, the cumulative probability was obtained by adding the probability, P(x), from the previously itemized probabilities where the cumulative summation of a probability is always equal to one (1) or 100%. A random number formula, =RAND(), was plugged into the Microsoft Excel desired cell, in this situation, (H4), which generated a random range of numbers that are greater than or equal to zero and less than one.
The interim time between breakdowns were achieved simply by soliciting the experience several staff members in the college of business who were familiar with frequency of the copier’s inconsistent behavior. It was estimated that the time between breakdowns was probably between zero and six weeks. Using the continuous probability distribution formula, x=6√r1, where six is the maximum number of weeks in this study and r1 is the random number. The amount of breakdowns were achieved by attaining the result of the cumulative time after determining that the number of breakdowns needed to assess the case study of approximately one year, or more accurately, 52 weeks. JET Copies projected that they would sell between 2000 and 8000 copies per day at $0.10 per copy. The loss of revenue was calculated by choosing the average number between 2000 and 8000—5000. Multiplying 5000 by the cost per copy at $0.10 per copy, would underperform a $500.00 loss of revenue per day. On average, their loss of revenue per year would compute to around $15,500.
The way of putting all the components together within a Microsoft Excel spreadsheet, was by attaining the random number range for the probability distribution. Setting up a simulation with the essential formulas in the spreadsheet will assist in computing the answers required to provide the company with a ballpark figure so they are able to proceed with a productive copying business.
I am confident that my answer is a good one due to its ability to support itself through calculation. The formulas and instructions that were given to process the results backed my answer thoroughly to complete the next step, nevertheless, being completely based on random numbers generated by the computer, it supplied me with an inkling of what it would require to move forward in the direction of an unforeseeable challenge of starting a business. The case study was clear and concise providing me with the ability to complete the problem with ease. After double checking my answer, I am very confident that my answer is a good one.
In this study, a few limits were observed. JET Copies initially spent $18,000 on a piece of equipment that would ultimately cost the company on average, $59,000 a year in repair expenses to maintain it; that’s roughly one month per year, that the copier is broken down. According to this particular case problem, the loss of revenue exceeded $12,000 by $3,500. Realizing that this surpasses their limit, they should purchase the $8,000 smaller backup copier to use when the main copier is inoperable. JET Copies revenue is dependent on an operable and reliable copy machine. Overall, it was a suitable idea, however the frequency of breakdowns and the downtime for repair results in a bad business plan.