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If not, open the file SIM.xla using File Open or Tools Add-Ins. ] ^b cj kt u6 Press the F9 key a few times to test the formula.m4) Choose the Run command from the Simulate menu and specify Profit (B14) as the out put cell. Then click OK. # $s The results will appear in a new workbook called SimStats.xls. Use the Excel Window command to move between the P Q5) The simulation will now run by plugging random Demand values into cell B5 while recording the resulting values of the Profit cell.  t2) Run a simulation of profit as described on the previous tab to familiarize yourself with the underlying concepts.d Be sure to check that the random number formula is still in in cell B5 by pressing the F9 key. 9Experimenting with Various Investments to Maximize Profit{Five investment values have been entered in cells G8 through G12. These will be sequentially plugged into cell B8, thereby vchanging planned capacity, whereupon a new simulation will be run. This process is known as Parameterized simulation.Next, an experiment will be performed to quickly compare the results of investing various amounts which lead to different capacities.t4) The parameterized simulation will now perform five separate simulations of profit, one for each investment level.~INSIGHT.xla contains additional simulation examples and software to run up to 5000 trials. See www.AnalyCorp.com for details. Copyright 2000, Sam Savage'Steps for Simulating Profit - Project 1DSee The Building Blocks of Uncertainty for more detail on simulation &Estimated Demand (in thousands)x2) Click on the Model Tab and explore the spreadsheet. Notice that with average demand of 100 in B5, that profit is $10. Output NameAverageStd DevStd ErrMaxMin Percentiles% <== Average profit much less than 10= <== 5% chance of losing 7 million or more (5% Value at Risk)? <== 10% chance of losing 3 million or more (10% Value at Risk)F6) Click on the Histogram and Cumulative buttons to view these graphs. Histogram CumulativesThese graphs show that if demand drops below the average of 100k, then NPV will be less than $10M. But the capacityIprevents any upside benefit in the event that demand exceeds the average.v3) To model the uncertainty in demand, enter the random number generating function into B5 as shown in the comment on k the Model Tab. This formula will generate Demand values that lie between 50 and 150, 95% of the time. FAB.xls and statistics sheet.(3) Choose the Parameterized Sim command  ' from the Simulate menu and specify + the settings in the dialog box as shown.Profit in MillionsInvestment in MillionsRevenue in Millions Look at the Parameterized Graph as shown below. The middle line shows the average profit for the various levels of investment, With $25 Million being the best. The bottom (yelloe) line shows the 5% Value at Risk (the losses that would be exceeded 5% of the time). This line indicates a 5% chance of losing over $6 Million if you invest $30 Million, whereas an investment of $25 Million subjects you & to a 5% VaR of less than $2Million.Micro Chip Fabrication Plant4NOTE: This model is greatly simplified from reality..errors induced by the use of "average" inputs.Financial Model1And has been designed to illuminate the types of @ $0.3 Million/1000 units@ $.4 Million/1000 unitsResulting Capacity (000's):`J qLPhQ_RhlT rV| DoX =cxqD\Pbk7( :b?z'>'>QV $XWRPDWLF0I\O[Н0(() @=wPb&s0bip02 b b2pp04ЂЂbtT0bt00|恀恰zm00b E000bbb߿0btbt0bsolver_valcentyperlink\ЂЂdblb0Pb0{T0P>Ze0Z>բ0>Z`բb\Ѣnlb}blAA?lbbM_lb}BmHb%$`T0lb`T0`T0TXb Ӣ`bÆ0}`T0lb|b`T0Bbbŕ0`T0`T0H)0`T0`T0Bby0^< bb%08b^ Ӣ` 0<^8bVTbb :Xb I A^a3d  dMbP?_*+%,MHP LaserJet 4M@g XX@MSUDHP LaserJet 4M<d "dXX??cU} ; A T0;b,b,\, , , ,b b W I\K  ,( ,  , ;b  ,b , ) ' ' ' '% '& ' ' ' ' '' . / -- 01@  0 2@(T(.!,T0",b#,b$,\%,&,',*,b+,b;,W<,I\K@, !0!2 &? "0~ "2$@ #0#2@.? $-3 %4%5~ &6@&71 &'~ '6$@'3333# '' *' +8! +8" ;'# <'$ @'"  ..z b( 3f3f3  v  <A@AA? ]& TL  3 A,@ ;@]&`t`X  S A+ :]&`>@  I %xhkbk  dMbP?_*+%,MHP LaserJet 4M@g XX@MSUDHP LaserJet 4M<d "dXX??cU} ; %T0,b,b,b, , , ,b ,b,,,b,b,,b,,,,b * ' ' ' ' ' ' '( ') 9*'''' ' '. '/ '0 '1*vh $,T0$' ( 3f3f3 L  3 A @/]&`~v  <A@AA? Z]&X >@((( I ncs  dMbP?_*+%MHP LaserJet 4M@g XX@MSUDHP LaserJet 4M<d "dXX??U} v} } }  } }  XT0b@@bbb@b @ h@ @b wb@ @bY@Yb@ 2 ;5  ~ !Y@  ,  7~ (>@~ 4@ 9%"Y@ D333333?~ 9@  ~ >@ :-  ~ A@ 8. #D@ ?##B   ~ D@   +! #$@  CC   $ , % +3 & +6 +4*h& 4Y.bG0( @A@A ~  <$@ XPP? @]4@$@$ `^lx$  <This cell initially contains the average demand of 100k. To model the uncertainty in demand, type the formula below into this cell. Press the F9 key to test. NOTE SIM.xla must be loaded first. =gen_Normal(100,25)<  * }.~~  <@ XPP? )>]4@@ rH"Y <Capacity for the proposed plant costs $0.3 per unit so a $30 Million investment has been entered to achieve the desired capacity of 100,000.< @A~~  <@ XPP? ]4@@t rH"Y E<FThe capacity resulting from the investment above is calculated here. < HD E@A~~  <PA XPP?   ]4@PA rH"Y o<pRevenue is calculated as $0.4 times either the actual demand, or the capcaity of the FAB, whichever is smaller.< o~~  <A XPP? I  ]4@A rH"Y "<#Profit is Revenue minus Investment< { " Sam L. Savage  Sam L. Savage  Sam L. Savage   Sam L. Savage   Sam L. Savage >@  Oh+'08@Xp Sam L. SavagexSam L. SavagexMicrosoft Excel@Ȝ ՜.+,D՜.+,L PXp x  Personal Useo1 Simulating ProfitInvesting for Maximum Profit Model  Worksheets 6> _PID_GUIDAN{15EE7535-7D6E-11D3-8DBF-C69B1895695D}  !"#$%&'()*+,-./0123456789:;<=?@ABCDEGHIJKLMRoot Entry F`Q8}Workbook{SummaryInformation(>DocumentSummaryInformation8F