A business wants to decide whether to launch a new product. If the product is launched there are two elements of uncertainty: 0.70 probability that sales that sales will be 8000 units per month and 0.30 that sales will be 5000 units per month. If sales are 8000 units per month, there is a 0.5 probability that the contribution per unit will be K2 and a 05 probability that it will be negative –K1. With sales of 5000 units there is a 0.6 probability that the contribution per unit will be K3 and a 04 probability that it will be K3 and a 0.4 probability that it will be K1. Advise management using decision tree analysis
Q: Tyler Apiaries sells bees and beekeeping supplies. Bees (including a queen) are shipped in special…
A: given that: average 1.4 std.deviation 0.16 USL 1.8 LSL 1.2
Q: Using a 2-month moving average, calculate the forecast for March and April (round your responses…
A: A moving average, which represents the average of any subset of values, is a technique for gaining a…
Q: An electronic store uses continuous review policy to manage the inventory of its high selling…
A: *As per guidelines first, three-part are answerable for multipart qs, please repost the remaining…
Q: GENERATE THE DECISION VARIABLE SOLUTION AND GENERATE A SENSITIVITY REPORT CASE 1. Julia's Food Booth…
A: Linear programming is a mathematical technique that is also used in operations management…
Q: Q4) Ten samples of size four were taken from a process, and their weights measured. The sample…
A: Given Sample Data:
Q: Explain the following; i. change management ii. E-Business
A: Change Management = It is the method and manners which help the organisation to implement and…
Q: Maximize eamings = $0.80xX₁ + $0.40X₂ + $1.20X3 - $0.10X4 subject to X₁ + 2X₂ + X3 +5X = 150 X₂ 4X₂…
A: Linear programming is a mathematical technique that is also used in operations management…
Q: a) The expected (estimated) time for activity C is weeks. (Round your response to two decimal…
A: The critical path depicts the maximum duration that a project can take to be completed.
Q: Exponential smoothing, =0.2 and forecast for Year 1 = 5 Linear trend Which forecast method has the…
A: Forecasting is a technique used to predict future outcomes on the basis of past data. Business…
Q: George Kyparisis owns a company that manufactures sailboats. Actual demand for George's sailboats…
A: Solution Season 1 2 3 4 Winter 1440 1280 1000 900 Spring 1520 1420 1640 1500 Summer 1000…
Q: Use the assignment method to determine the maximize profit that can be generated with optimal…
A: For finding the maximised profit, the matrix will be converted into minimization problem.
Q: You manage a production line that operates using a monthly production cycle. There are five…
A: Line capacity = 500 hrs. Product 1 Product 2 Product 3 Product 4 Product 5 Monthly Demand…
Q: What is the significance of controlling inventory expenditures effectively?Describe the economic…
A: Maintaining a consistent level of inventory investment is essential.The capacity of a business to…
Q: Suppose there is a company that does all the work manually and has a particular system in each…
A: Enterprise resource planning is a business suite that enables various organizations to manage the…
Q: can you Discuss the importance of ethics in the current scenario?
A: Ethics is defined as a company's social responsiveness. it deals with what is right and wrong or…
Q: In preparing a Technical document, one must consider certain key factors in order to meet the needs…
A: Technical document:- Many sectors require the practise of technical documentation. These documents…
Q: This exercise contains only parts b, c, and d. b) The activities on the critical path are A-B-F c)…
A: Forward pass: Earliest Start (ES) = Maximum of all predecessor activities (ES = 0 for Start…
Q: From a technical perspective, how should the threat be classified? What kinds of dangers do people…
A: With the development of information and communication technologies and increasing accessibility to…
Q: You look over the reports from the last 24 hours of your production line. You see the following:…
A: OEE (Overall Equipment Effectiveness) refers to the technique to measure the production process…
Q: When individuals use the term "scope," what does it really mean?
A: Scope refers to the range of capabilities of a person. The extent to which a person can do the task…
Q: preparation process.
A: The ‘Production Preparation Process’ is a powerful way of taking a big-picture glimpse at how a…
Q: What is the unemployment in the region?
A: The Above Question can be solved by probablistic sampling:
Q: Frandec Company manufactures, assembles, and rebuilds material-handling equipment used in warehouses…
A: Given data is Component Manufacturing cost($) Purchase cost($) Frame 37 50 Support 10.50 14…
Q: Mark Gershon, owner of a musical instrument distributorship, thinks that demand for guitars may be…
A: Given, Appearances Demand 4 4 4 6 6 7 6 5 8 10 6 8
Q: #17 FAVORABLE UNFAVORABLE MARKET MARKET EQUIPMENT ( $)…
A: “Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: The fixed cost at Harley Motors are $ 1Million annually. The min. product has revenue of $26.64 per…
A: Production is the process in which inputs are combined to have the required output. It includes a…
Q: Course: Human resource management Who should be responsible for the selection and evaluation of the…
A: Human resource management often called HRM can be stated as the approach of hiring or employing…
Q: Dave Fletcher was able to determine the activity times for constructing h ser scanning machine.…
A: 1. During forward pass in case of more than two preceding activities the early start will be…
Q: Give an explanation of risk management ideas.
A: Lessening the negative effects of risk occurrences is known as risk mitigation. reducing inherent…
Q: A local restaurateur, Cho Senn, is considering three options for his new Asian fusi restaurant.…
A: Given data, For Option A, the annual fixed cost=42500 the variable cost per customer=3.45 For…
Q: Determine the expected value of the contribution
A: The expected value of a decision tree is the sum of the expected values of all the nodes.
Q: What benefits come from doing a security risk assessment?
A: A security risk assessment can be stated as the approach that is used to recognize, evaluates, and…
Q: What is factor of safety? Why is it called factor of ignorance? Explain briefly
A: The design impacts operations and evaluates the number of elements fabricating the item and states…
Q: A catering company prepared and served 350 meals at an anniversary celebration last week using 10…
A: Given: The catering company prepared and served items on the anniversary =350 meals Labour…
Q: Why was Frederick Winslow Taylor known as the father of scientific management.
A: Frederick Winslow Taylor is known as a father of scientific management who invent the scientific…
Q: Complete the following MRP matrices for item X: i) Gross requirements Scheduled receipts Inventory…
A: Instructions and formula used: Projected on hand = Planned order receipts + ending inventory…
Q: The Fieldale Dairy produces cheese, which it sells to su-permarkets and food processing companies.…
A: Given data is
Q: In the following operations, isolate a system for analysis and define customers, services produced,…
A: a. A college: A college is an institution that provides knowledge and education. Students from all…
Q: he manager of a crew that installs carpeting has tracked the crew’s output over the past several…
A: Calculate Labor productivity Formula = Yards/Crew size Week Crew Size Yards Labor productivity…
Q: Café Michigan's manager, Gary Stark, suspects that demand for mocha latte coffees depends on the…
A: Given, Price Number Sold 2.5 765 3.6 515 2.1 975 4.1 245 3.1 315 4.05 490
Q: time-series trend equation is 25.3 + 21x. What is your forecast for period 7? Part 2 A. 172.3…
A: Ans) y = 25.3 + 21x Forecast for period x=7 : x = 7 , y = 25.3+21*7 = 25.3+147 = 172.3
Q: You are conducting a retrospective analysis for an Order-Up-To system with delivery lead time of 4…
A: Find the Given details below: Given details: Lead time 4 Weeks 4th Week beginning inventory…
Q: Write brief notes on purchasing mix and management of Inventory
A: Purchasing mix = Purchasing mix provides the list of factors which impact the purchasing decision…
Q: Semiconductor wafers are made in a set of machines in a company. Part A is a classic one, while part…
A: Operation On Machine Fraction scrap Part A 1 M1 0.05 2 M2 0.10 3 M3 0.15 Part B 1 M1 0.20…
Q: Draw a network diagram that represents the following activities of a project: Activity Immediate…
A: A network is a graphical representation of a project, depicting the flow as well as the sequence of…
Q: Monday Tuesday Wednesday Thursday Friday Using this table above, solve for Mean Absolute Deviation…
A: MAD is the average of the absolute deviations calculated of each period. Absoluture error =…
Q: George Kyparisis makes bowling balls in his Miami plant. With recent increases in his costs, he has…
A: Given: Units produced last year = U1 = 1000 Labor hours required last year = H1 = 300 Units produced…
Q: A linear programming computer package is needed. The Westchester Chamber of Commerce periodically…
A:
Q: Tommy Hilfiger is currently considering to source certain textile goods, Tommy Jeans, from Mexico.…
A: Maximum allowable production cost can be determine by comparing the total cost for each option. By…
Q: The forecast for Monday was derived by observing Monday's demand level and setting Monday's…
A: Forecasting can be done by various methods like moving averages, exponential smoothing, weighted…
- A business wants to decide whether to launch a new product. If the product is launched there are two elements of uncertainty: 0.70 probability that sales that sales will be 8000 units per month and 0.30 that sales will be 5000 units per month.
If sales are 8000 units per month, there is a 0.5 probability that the contribution per unit will be K2 and a 05 probability that it will be negative –K1. With sales of 5000 units there is a 0.6 probability that the contribution per unit will be K3 and a 04 probability that it will be K3 and a 0.4 probability that it will be K1.
Advise management using decision tree analysis
Step by step
Solved in 3 steps with 1 images
- You now have 10,000, all of which is invested in a sports team. Each year there is a 60% chance that the value of the team will increase by 60% and a 40% chance that the value of the team will decrease by 60%. Estimate the mean and median value of your investment after 50 years. Explain the large difference between the estimated mean and median.Based on Babich (1992). Suppose that each week each of 300 families buys a gallon of orange juice from company A, B, or C. Let pA denote the probability that a gallon produced by company A is of unsatisfactory quality, and define pB and pC similarly for companies B and C. If the last gallon of juice purchased by a family is satisfactory, the next week they will purchase a gallon of juice from the same company. If the last gallon of juice purchased by a family is not satisfactory, the family will purchase a gallon from a competitor. Consider a week in which A families have purchased juice A, B families have purchased juice B, and C families have purchased juice C. Assume that families that switch brands during a period are allocated to the remaining brands in a manner that is proportional to the current market shares of the other brands. For example, if a customer switches from brand A, there is probability B/(B + C) that he will switch to brand B and probability C/(B + C) that he will switch to brand C. Suppose that the market is currently divided equally: 10,000 families for each of the three brands. a. After a year, what will the market share for each firm be? Assume pA = 0.10, pB = 0.15, and pC = 0.20. (Hint: You will need to use the RISKBINOMLAL function to see how many people switch from A and then use the RISKBENOMIAL function again to see how many switch from A to B and from A to C. However, if your model requires more RISKBINOMIAL functions than the number allowed in the academic version of @RISK, remember that you can instead use the BENOM.INV (or the old CRITBENOM) function to generate binomially distributed random numbers. This takes the form =BINOM.INV (ntrials, psuccess, RAND()).) b. Suppose a 1% increase in market share is worth 10,000 per week to company A. Company A believes that for a cost of 1 million per year it can cut the percentage of unsatisfactory juice cartons in half. Is this worthwhile? (Use the same values of pA, pB, and pC as in part a.)W. L. Brown, a direct marketer of womens clothing, must determine how many telephone operators to schedule during each part of the day. W. L. Brown estimates that the number of phone calls received each hour of a typical eight-hour shift can be described by the probability distribution in the file P10_33.xlsx. Each operator can handle 15 calls per hour and costs the company 20 per hour. Each phone call that is not handled is assumed to cost the company 6 in lost profit. Considering the options of employing 6, 8, 10, 12, 14, or 16 operators, use simulation to determine the number of operators that minimizes the expected hourly cost (labor costs plus lost profits).
- A new edition of a very popular textbook will be published a year from now. The publisher currently has 1000 copies on hand and is deciding whether to do another printing before the new edition comes out. The publisher estimates that demand for the book during the next year is governed by the probability distribution in the file P10_31.xlsx. A production run incurs a fixed cost of 15,000 plus a variable cost of 20 per book printed. Books are sold for 190 per book. Any demand that cannot be met incurs a penalty cost of 30 per book, due to loss of goodwill. Up to 1000 of any leftover books can be sold to Barnes and Noble for 45 per book. The publisher is interested in maximizing expected profit. The following print-run sizes are under consideration: 0 (no production run) to 16,000 in increments of 2000. What decision would you recommend? Use simulation with 1000 replications. For your optimal decision, the publisher can be 90% certain that the actual profit associated with remaining sales of the current edition will be between what two values?You have 5 and your opponent has 10. You flip a fair coin and if heads comes up, your opponent pays you 1. If tails comes up, you pay your opponent 1. The game is finished when one player has all the money or after 100 tosses, whichever comes first. Use simulation to estimate the probability that you end up with all the money and the probability that neither of you goes broke in 100 tosses.Play Things is developing a new Lady Gaga doll. The company has made the following assumptions: The doll will sell for a random number of years from 1 to 10. Each of these 10 possibilities is equally likely. At the beginning of year 1, the potential market for the doll is two million. The potential market grows by an average of 4% per year. The company is 95% sure that the growth in the potential market during any year will be between 2.5% and 5.5%. It uses a normal distribution to model this. The company believes its share of the potential market during year 1 will be at worst 30%, most likely 50%, and at best 60%. It uses a triangular distribution to model this. The variable cost of producing a doll during year 1 has a triangular distribution with parameters 15, 17, and 20. The current selling price is 45. Each year, the variable cost of producing the doll will increase by an amount that is triangularly distributed with parameters 2.5%, 3%, and 3.5%. You can assume that once this change is generated, it will be the same for each year. You can also assume that the company will change its selling price by the same percentage each year. The fixed cost of developing the doll (which is incurred right away, at time 0) has a triangular distribution with parameters 5 million, 7.5 million, and 12 million. Right now there is one competitor in the market. During each year that begins with four or fewer competitors, there is a 25% chance that a new competitor will enter the market. Year t sales (for t 1) are determined as follows. Suppose that at the end of year t 1, n competitors are present (including Play Things). Then during year t, a fraction 0.9 0.1n of the company's loyal customers (last year's purchasers) will buy a doll from Play Things this year, and a fraction 0.2 0.04n of customers currently in the market ho did not purchase a doll last year will purchase a doll from Play Things this year. Adding these two provides the mean sales for this year. Then the actual sales this year is normally distributed with this mean and standard deviation equal to 7.5% of the mean. a. Use @RISK to estimate the expected NPV of this project. b. Use the percentiles in @ RISKs output to find an interval such that you are 95% certain that the companys actual NPV will be within this interval.
- Software development is an inherently risky and uncertain process. For example, there are many examples of software that couldnt be finished by the scheduled release datebugs still remained and features werent ready. (Many people believe this was the case with Office 2007.) How might you simulate the development of a software product? What random inputs would be required? Which outputs would be of interest? Which measures of the probability distributions of these outputs would be most important?A common decision is whether a company should buy equipment and produce a product in house or outsource production to another company. If sales volume is high enough, then by producing in house, the savings on unit costs will cover the fixed cost of the equipment. Suppose a company must make such a decision for a four-year time horizon, given the following data. Use simulation to estimate the probability that producing in house is better than outsourcing. If the company outsources production, it will have to purchase the product from the manufacturer for 25 per unit. This unit cost will remain constant for the next four years. The company will sell the product for 42 per unit. This price will remain constant for the next four years. If the company produces the product in house, it must buy a 500,000 machine that is depreciated on a straight-line basis over four years, and its cost of production will be 9 per unit. This unit cost will remain constant for the next four years. The demand in year 1 has a worst case of 10,000 units, a most likely case of 14,000 units, and a best case of 16,000 units. The average annual growth in demand for years 2-4 has a worst case of 7%, a most likely case of 15%, and a best case of 20%. Whatever this annual growth is, it will be the same in each of the years. The tax rate is 35%. Cash flows are discounted at 8% per year.Based on Marcus (1990). The Balboa mutual fund has beaten the Standard and Poors 500 during 11 of the last 13 years. People use this as an argument that you can beat the market. Here is another way to look at it that shows that Balboas beating the market 11 out of 13 times is not unusual. Consider 50 mutual funds, each of which has a 50% chance of beating the market during a given year. Use simulation to estimate the probability that over a 13-year period the best of the 50 mutual funds will beat the market for at least 11 out of 13 years. This probability turns out to exceed 40%, which means that the best mutual fund beating the market 11 out of 13 years is not an unusual occurrence after all.
- It costs a pharmaceutical company 75,000 to produce a 1000-pound batch of a drug. The average yield from a batch is unknown but the best case is 90% yield (that is, 900 pounds of good drug will be produced), the most likely case is 85% yield, and the worst case is 70% yield. The annual demand for the drug is unknown, with the best case being 20,000 pounds, the most likely case 17,500 pounds, and the worst case 10,000 pounds. The drug sells for 125 per pound and leftover amounts of the drug can be sold for 30 per pound. To maximize annual expected profit, how many batches of the drug should the company produce? You can assume that it will produce the batches only once, before demand for the drug is known.You now have 5000. You will toss a fair coin four times. Before each toss you can bet any amount of your money (including none) on the outcome of the toss. If heads comes up, you win the amount you bet. If tails comes up, you lose the amount you bet. Your goal is to reach 15,000. It turns out that you can maximize your chance of reaching 15,000 by betting either the money you have on hand or 15,000 minus the money you have on hand, whichever is smaller. Use simulation to estimate the probability that you will reach your goal with this betting strategy.