Draw a decision tree and determine the payoff for each decision and event node. Which alternative should the manufacturer choose?
Q: A manager of the Schumacher & Company's Retail Division in Asia is trying to decide whether to build…
A: The decision tree looks like:
Q: Mary is considering the possibility of opening a small dress shop on Avenue, a few blocks from the…
A: solution to a and b decision for EMV = medium sized shop as it gives maximum value
Q: Explain 3 ways that can be implemented by Ali to build and sustain BMM organizational cultures 1.…
A: BMM was founded by Ali in the year 2015. The business has achieved enough success intwo years that…
Q: A producer of pottery is considering the addition of a new plant to absorb the backlog of demand…
A: Break even point is the no profit no loss situation for a firm. Formula to be used ; Volume needed =…
Q: Clients are building a midrise apartment community in San Diego. Below are the unit sizes and prices…
A: For the first floor price $1,800: 2nd Floor = 1800+(0.01×1800)=$1,818 3rd Floor =…
Q: A firm must decide whether to construct a small, medium or large stamping plant. A consultant’s…
A: (Note: All the currency values are in Million)
Q: Paul Lennon, DDS, has $35,675 to place in a retirement account today. He plans to add $740 a month…
A:
Q: Tim Smunt has been asked to evaluate two machines. After some investigation, he determines that…
A: For Machine A - Cash Flow at Year 0 = -15000 Cash Flow at Year 1 = -2400-4300 = -6700 Cash Flow at…
Q: Expando, Inc, is considering the possibility of building an additional factory that would produce a…
A: Given, NPV of Small facility with low demand = 9 - 7 = $2 million NPV of Small facility with high…
Q: Projects W, X, Y, and Z are each being screened according to four criteria: Potential Return on…
A: The method, process, knowledge, and skill are used by the organization to accomplish the objective…
Q: Required: Calculate the EVA for each of Banyan’s divisions. Calculate the residual income (RI) for…
A: GIVEN: Tax rate = 30% rate of return = 20% Division A average cost of capital = 9.5% Division B…
Q: The state and local police departments are trying to analyze crime rates so they can shift their…
A: Given data: Number of samples = 12 Sample size = 1040
Q: Many business schools are increasing their offerings of internship and study abroad programs. In…
A: 1.) Internships are important that they are short-term workplace practical experiences that provide…
Q: APC industries has been experiencing significant growth and has been having difficulty meeting…
A: Decision theory is used to make decisions based on different criteria and preferences. Here, there…
Q: A builder has located a piece of property that she would like to buy and eventually build on. The…
A: Step 1: The following Information is given: Decision Point Outcome Probability Conditional…
Q: See the answer A local movie studio wants to determine which of two new scripts they should select…
A:
Q: A surfboard manufacturer lost $500,000 last year during a recession. Total revenue was $5,000,000…
A: Given Sales = $5,000,000 Total variable cost = 40% of sales = 40% of $5,000,000…
Q: Dave Escalona, a DLSL Computer Engineering graduate, is considering the possibility of opening a…
A: Decision making is a process of selecting the best alternatives from all possible decisions based on…
Q: 3-29 Mick Karra is the manager of MCZ Drilling Prod- ucts, which produces a variety of specialty…
A: Given data, Demand level Low demand = 20%Medium Demand = 30% High Demand = 50%…
Q: What is the probability that the demand will be more than 10,000,000? b. Will you recommend the…
A: In the question following information is provided: Demand- 5,000,000 Expected demand- up by 50%…
Q: Techno Corporation is currently manufacturing an item at variable costs of $5 per unit. Annual fixed…
A: Profit = Sales - total Cost = 30000*10 - (140000+ 30000*5) = $10000 a. New Fixed Cost = 140000 +…
Q: Average price per computer device Php25,000 Average price per Apple device Php30,000 In UST,…
A: The following data is given: Total = 40,000, Commerce= 5000, Medicine= 6000,AB= 8000, Law=2000,…
Q: In choosing between three new jobs, Johan considers the potential payoffs over the next three years.…
A:
Q: The operations manager of Staples Inc. is deciding whether to invest in buying one machine or two…
A: Given Information: Alternative Conditions Cost Probability Investment…
Q: A company manufactures tables and chairs. Each table and chair must be made entirely out of oak or…
A: Linear Programming: Linear programming is a mathematical model which is used to achieve the best…
Q: In 2007 San Francisco began its Healthy San Francisco Plan designed to provide health care for all…
A: Role of Government in Healthcare- The government has been essentially playing important role in…
Q: Bob Carlton’s golf camp estimates the following staff requirements for its services over the next 2…
A: Production scheduling can be done using different strategies like Level strategy, chase strategy…
Q: Suppose that an aircraft manufacturer desires to make a preliminary estimate of the cost of building…
A: Cost is the sum of money used by the manufacturer to manufacture and sell the commodities in the…
Q: Haya International are considering a project that is susceptible to risk. An initial investment of…
A: The initial investment in machine = OMR80000 working capital at the end of 4 years = OMR10,000 The…
Q: Techno Corporation is currently manufacturing an item at variable costs of $4 per unit. Annual fixed…
A:
Q: Dr. David Paul is a medical doctor at a small private hospital in XYZ city. He sits on the Board of…
A: Conflict of Interest is a situation where an individual or an entity have different concerns or aims…
Q: Suppose that an aircraft manufacturer desires to make a preliminary estimate of the cost of building…
A: Assume, CA be the cost of 600-MW fossil-fuel plant. CB be the cost of 200-MW fossil-fuel plant.…
Q: A small publishing company is planning to publish a new book. The production costs will include…
A: 1. Fixed Cost = $ 49,465 2. Variable Cost = $ 11.25 3. One Time Fixed Cost =$ 19,240 4. Variable…
Q: The state and local police departments are trying to analyze crime rates so they can shift their…
A: Number of sample = 12 Sample size = 1170
Q: A manufacturing firm plans to expand the current distribution network. The manager of the firm…
A: We will use the up-front charge technique to determine the expected success rate of customers…
Q: A manager is trying to decide whether to build a small,medium, or large facility. Demand can be low,…
A: Find the Calculations below: Formulas:
Q: Policy makers talk about the “capacity” of the economy to grow. What specifically is meant by the…
A: The capacity of the economy also known as economic capacity or productive capacity is the total…
Q: A rock concert producer has scheduled an outdoor concert. The producer estimates the attendance will…
A: Formula to be used to calculate the profit = Profit = Revenue - Cost
Q: A hardware company is studying a plan to open a new distribution center in the southeast. The…
A: Objective Functions and Constraints: Based on the given details, the objective…
Q: What are your recommendations for this sequence of decisions for HDG?
A: One recommends the HDG company to buy an apartment rather than the land.
Q: A commercial company has a man branch located in Beirut with around 35 employees. The company is…
A: The right answer is the second option.
Q: Mt. Kinley is a strategy consulting firm that divides its consultants into three classes:…
A: Given that: Stab le size of firm lasts= 20 years Expected associates = 200 Expected managers = 60…
Q: There are two competing alternatives in your textile business. A-type Tufting Machine costs $10,000…
A: Type A Tufting Machine cost =$10,000 Type B Tufting Machine cost =$10,000 Saving from Machine A in…
Q: E-education is a new start-up that develops, and markets MBA courses offered over the internet. The…
A: Concept a decision tree that deliberates all of E-Education’s substitutes. The subsequent displays…
Q: A firm is considering three different locations in which to build a factory. The costs associated…
A: Since you have submitted a question with multiple subparts, as per the guidelines we have answered…
Q: Bob Carlton’s golf camp estimates the following staff requirements for its services over the next 2…
A: Chase Strategy The chase strategy relates to the idea that you are following the market's demand.…
Q: Wallace Heating is attempting to estimate its costs of manufacturing heating ducts for the…
A: Answer: By using the following formula variable cost per hour can be calculated. Variable cost per…
Q: In considering a capacity expansion, we have two alternatives. The first alternative is expected to…
A: The determination of the favourable alternative and expected value of the capacity expansion is…
Work to be done in EXcel with formulas
A manufacturer must decide whether to build a small or a large plant at a new location. Demand at the location can be either low or high, with probabilities estimated to be 0.4 and 0.6, respectively. If a small plant is built, and demand is high, the
Draw a decision tree and determine the payoff for each decision and event node. Which alternative should the manufacturer choose?
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 8 images
- Assume the demand for a companys drug Wozac during the current year is 50,000, and assume demand will grow at 5% a year. If the company builds a plant that can produce x units of Wozac per year, it will cost 16x. Each unit of Wozac is sold for 3. Each unit of Wozac produced incurs a variable production cost of 0.20. It costs 0.40 per year to operate a unit of capacity. Determine how large a Wozac plant the company should build to maximize its expected profit over the next 10 years.If a monopolist produces q units, she can charge 400 4q dollars per unit. The variable cost is 60 per unit. a. How can the monopolist maximize her profit? b. If the monopolist must pay a sales tax of 5% of the selling price per unit, will she increase or decrease production (relative to the situation with no sales tax)? c. Continuing part b, use SolverTable to see how a change in the sales tax affects the optimal solution. Let the sales tax vary from 0% to 8% in increments of 0.5%.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.
- Seas Beginning sells clothing by mail order. An important question is when to strike a customer from the companys mailing list. At present, the company strikes a customer from its mailing list if a customer fails to order from six consecutive catalogs. The company wants to know whether striking a customer from its list after a customer fails to order from four consecutive catalogs results in a higher profit per customer. The following data are available: If a customer placed an order the last time she received a catalog, then there is a 20% chance she will order from the next catalog. If a customer last placed an order one catalog ago, there is a 16% chance she will order from the next catalog she receives. If a customer last placed an order two catalogs ago, there is a 12% chance she will order from the next catalog she receives. If a customer last placed an order three catalogs ago, there is an 8% chance she will order from the next catalog she receives. If a customer last placed an order four catalogs ago, there is a 4% chance she will order from the next catalog she receives. If a customer last placed an order five catalogs ago, there is a 2% chance she will order from the next catalog she receives. It costs 2 to send a catalog, and the average profit per order is 30. Assume a customer has just placed an order. To maximize expected profit per customer, would Seas Beginning make more money canceling such a customer after six nonorders or four nonorders?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.The Pigskin Company produces footballs. Pigskin must decide how many footballs to produce each month. The company has decided to use a six-month planning horizon. The forecasted monthly demands for the next six months are 10,000, 15,000, 30,000, 35,000, 25,000, and 10,000. Pigskin wants to meet these demands on time, knowing that it currently has 5000 footballs in inventory and that it can use a given months production to help meet the demand for that month. (For simplicity, we assume that production occurs during the month, and demand occurs at the end of the month.) During each month there is enough production capacity to produce up to 30,000 footballs, and there is enough storage capacity to store up to 10,000 footballs at the end of the month, after demand has occurred. The forecasted production costs per football for the next six months are 12.50, 12.55, 12.70, 12.80, 12.85, and 12.95, respectively. The holding cost incurred per football held in inventory at the end of any month is 5% of the production cost for that month. (This cost includes the cost of storage and also the cost of money tied up in inventory.) The selling price for footballs is not considered relevant to the production decision because Pigskin will satisfy all customer demand exactly when it occursat whatever the selling price is. Therefore. Pigskin wants to determine the production schedule that minimizes the total production and holding costs. Can you guess the results of a sensitivity analysis on the initial inventory in the Pigskin model? See if your guess is correct by using SolverTable and allowing the initial inventory to vary from 0 to 10,000 in increments of 1000. Keep track of the values in the decision variable cells and the objective cell.
- The Pigskin Company produces footballs. Pigskin must decide how many footballs to produce each month. The company has decided to use a six-month planning horizon. The forecasted monthly demands for the next six months are 10,000, 15,000, 30,000, 35,000, 25,000, and 10,000. Pigskin wants to meet these demands on time, knowing that it currently has 5000 footballs in inventory and that it can use a given months production to help meet the demand for that month. (For simplicity, we assume that production occurs during the month, and demand occurs at the end of the month.) During each month there is enough production capacity to produce up to 30,000 footballs, and there is enough storage capacity to store up to 10,000 footballs at the end of the month, after demand has occurred. The forecasted production costs per football for the next six months are 12.50, 12.55, 12.70, 12.80, 12.85, and 12.95, respectively. The holding cost incurred per football held in inventory at the end of any month is 5% of the production cost for that month. (This cost includes the cost of storage and also the cost of money tied up in inventory.) The selling price for footballs is not considered relevant to the production decision because Pigskin will satisfy all customer demand exactly when it occursat whatever the selling price is. Therefore. Pigskin wants to determine the production schedule that minimizes the total production and holding costs. As indicated by the algebraic formulation of the Pigskin model, there is no real need to calculate inventory on hand after production and constrain it to be greater than or equal to demand. An alternative is to calculate ending inventory directly and constrain it to be nonnegative. Modify the current spreadsheet model to do this. (Delete rows 16 and 17, and calculate ending inventory appropriately. Then add an explicit non-negativity constraint on ending inventory.)The Pigskin Company produces footballs. Pigskin must decide how many footballs to produce each month. The company has decided to use a six-month planning horizon. The forecasted monthly demands for the next six months are 10,000, 15,000, 30,000, 35,000, 25,000, and 10,000. Pigskin wants to meet these demands on time, knowing that it currently has 5000 footballs in inventory and that it can use a given months production to help meet the demand for that month. (For simplicity, we assume that production occurs during the month, and demand occurs at the end of the month.) During each month there is enough production capacity to produce up to 30,000 footballs, and there is enough storage capacity to store up to 10,000 footballs at the end of the month, after demand has occurred. The forecasted production costs per football for the next six months are 12.50, 12.55, 12.70, 12.80, 12.85, and 12.95, respectively. The holding cost incurred per football held in inventory at the end of any month is 5% of the production cost for that month. (This cost includes the cost of storage and also the cost of money tied up in inventory.) The selling price for footballs is not considered relevant to the production decision because Pigskin will satisfy all customer demand exactly when it occursat whatever the selling price is. Therefore. Pigskin wants to determine the production schedule that minimizes the total production and holding costs. Modify the Pigskin model so that there are eight months in the planning horizon. You can make up reasonable values for any extra required data. Dont forget to modify range names. Then modify the model again so that there are only four months in the planning horizon. Do either of these modifications change the optima] production quantity in month 1?An automobile manufacturer is considering whether to introduce a new model called the Racer. The profitability of the Racer depends on the following factors: The fixed cost of developing the Racer is triangularly distributed with parameters 3, 4, and 5, all in billions. Year 1 sales are normally distributed with mean 200,000 and standard deviation 50,000. Year 2 sales are normally distributed with mean equal to actual year 1 sales and standard deviation 50,000. Year 3 sales are normally distributed with mean equal to actual year 2 sales and standard deviation 50,000. The selling price in year 1 is 25,000. The year 2 selling price will be 1.05[year 1 price + 50 (% diff1)] where % diff1 is the number of percentage points by which actual year 1 sales differ from expected year 1 sales. The 1.05 factor accounts for inflation. For example, if the year 1 sales figure is 180,000, which is 10 percentage points below the expected year 1 sales, then the year 2 price will be 1.05[25,000 + 50( 10)] = 25,725. Similarly, the year 3 price will be 1.05[year 2 price + 50(% diff2)] where % diff2 is the percentage by which actual year 2 sales differ from expected year 2 sales. The variable cost in year 1 is triangularly distributed with parameters 10,000, 12,000, and 15,000, and it is assumed to increase by 5% each year. Your goal is to estimate the NPV of the new car during its first three years. Assume that the company is able to produce exactly as many cars as it can sell. Also, assume that cash flows are discounted at 10%. Simulate 1000 trials to estimate the mean and standard deviation of the NPV for the first three years of sales. Also, determine an interval such that you are 95% certain that the NPV of the Racer during its first three years of operation will be within this interval.
- 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.When you use a RISKSIMTABLE function for a decision variable, such as the order quantity in the Walton model, explain how this provides a fair comparison across the different values tested.The DC Cisco office is trying to predict the revenue it will generate next week. Ten deals may close next week. The probability of each deal closing and data on the possible size of each deal (in millions of dollars) are listed in the file P11_55.xlsx. Use simulation to estimate total revenue. Based on the simulation, the company can be 95% certain that its total revenue will be between what two numbers?