Concept explainers
a)
To determine: The best decision using different decision criteria.
Introduction:
Decision analysis can be interpreted as the most common technique to make a decision in the situation when there is uncertainty. It uses quantitative measures to analyze the decision that is also used in operation of the firms.
b)
To determine: The best decision using different decision criteria.
Introduction:
Decision analysis can be interpreted as the most common technique to make a decision in the situation when there is uncertainty. It uses quantitative measures to analyze the decision that is also used in operation of the firms.
c)
To determine: The best decision using different decision criteria.
Introduction:
Decision analysis can be interpreted as the most common technique to make a decision in the situation when there is uncertainty. It uses quantitative measures to analyze the decision that is also used in operation of the firms.
d)
To determine: The best decision using different decision criteria.
Introduction:
Decision analysis can be interpreted as the most common technique to make a decision in the situation when there is uncertainty. It uses quantitative measures to analyze the decision that is also used in operation of the firms.
Want to see the full answer?
Check out a sample textbook solutionChapter 1 Solutions
OPERATIONS AND SUPPLY CHAIN MANAGEMENT
- The Martin-Beck Company operates a plant in St. Louis with an annual capacity of 30,000 units. Product is shipped to regional distribution centers located in Boston, Atlanta, and Houston. Because of an anticipated increase in demand, Martin-Beck plans to increase capacity by constructing a new plant in one or more of the following cities: Detroit, Toledo, Denver, or Kansas City. The estimated annual fixed cost and the annual capacity for the four proposed plants are as follows: Proposed Plant Annual Fixed Cost Annual Capacity Detroit $175,000 20,000 Toledo $300,000 30,000 Denver $375,000 40,000 Kansas City $500,000 10,000 The company’s long-range planning group developed forecasts of the anticipated annual demand at the distribution centers as follows: Distribution Center Annual Demand Boston 20,000 Atlanta 30,000 Houston 20,000 The shipping cost per unit from each plant to each distribution center is as follows: Distribution Centers Plant…arrow_forwardThe Martin-Beck Company operates a plant in St. Louis with an annual capacity of 30,000 units. Product is shipped to regional distribution centers located in Boston, Atlanta, and Houston. Because of an anticipated increase in demand, Martin-Beck plans to increase capacity by constructing a new plant in one or more of the following cities: Detroit, Toledo, Denver, or Kansas City. The estimated annual fixed cost and the annual capacity for the four proposed plants are as follows: Proposed Plant Annual Fixed Cost Annual Capacity Detroit $175,000 20,000 Toledo $300,000 30,000 Denver $375,000 40,000 Kansas City $500,000 10,000 The company’s long-range planning group developed forecasts of the anticipated annual demand at the distribution centers as follows: Distribution Center Annual Demand Boston 20,000 Atlanta 30,000 Houston 20,000 The shipping cost per unit from each plant to each distribution center is as follows: Distribution Centers Plant…arrow_forwardTommy Hilfiger is currently considering to source certain textile goods, Tommy Jeans, from Mexico. The estimated shipping time from Mexico to the U.S. for each shipment of Tommy Jeans is 4 days and the estimated freight cost of each shipment is $800. On the other hand, the current average shipping time from Vietnam to the U.S. for each shipment of Tommy Jeans is 23 days and the average freight cost is $2300. Even though the shipping time and freight cost seem to be much lower in case of Mexico, Tommy Hilfiger management is concerned about the production cost of each Jeans shipment. The management anticipates that the production cost of each Jeans shipment will be higher in Mexico compared to Vietnam. However, Tommy Hilfiger management has decided that even if the total cost (sum of production cost, freight cost, and holding cost) remain similar to Vietnam, Tommy Hilfiger will still source Jeans from Mexico because of the reduced shipping time, which, in turn, will result in better…arrow_forward
- A rapidly expanding company is looking to lease a small plant in Memphis, Tennessee, Biloxi, Mississippi, or Birmingham, Alabama. Prepare a cost benefit study for each of the three locations using the following data: The annual construction, facilities, and administration expenses for Memphis, Biloxi, and Birmingham will be $40,000, $60,000, and $100,000, respectively. In Memphis, labour and materials are estimated to cost $8 per month, $4 in Biloxi, and $5 in Birmingham. The Memphis site would add $50,000 a year to device transportation expenses, the Biloxi location would add $60,000 per year, and the Birmingham location would add $25,000 per year. The annual production is expected to be 10,000 units.arrow_forwardDillon DeMarco is considering opening a small Italian bakery in the nearby mall, close to the Italian section of the city. He has chosen a good location where he believes there will be interest in the bakery. However, Dillon is unsure how much interest there will be and is trying to decide whether to open a small, medium or large shop. It really depends on what the economy is like in the next year whether people are able to spend their money on his Italian delicacies. Based on the latest financial reports, there is a 20%20% probability for a strong economy, 30%30% probability for an average economy and 50%50% probability for a bad economy. The potential payoffs for a small, medium or large shop for a given year are shown in the decision table. Decision Table State of Nature Alternatives Strong Economy Average Economy Bad Economy Small Shop 20,00020,000 18,00018,000 30,00030,000 Medium Shop 45,00045,000 50,00050,000 45,00045,000 Large Shop 85,00085,000 64,00064,000…arrow_forwardThe Martin-Beck Company operates a plant in St. Louis with an annual capacity of 30,000 units. Product is shipped to regional distribution centers located in Boston, Atlanta, and Houston. Because of an anticipated increase in demand, Martin-Beck plans to increase capacity by constructing a new plant in one or more of the following cities: Detroit, Toledo, Denver, or Kansas City. The estimated annual fixed cost and the annual capacity for the four proposed plants are as follows: Plant Number Proposed Plant Annual Fixed Cost Annual Capacity 1 Detroit $150,000 10,000 2 Toledo $275,000 20,000 3 Denver $400,000 30,000 4 Kansas City $475,000 40,000 The company's long-range planning group developed forecasts of the anticipated annual demand at the distribution centers as follows. DistributionCenter Number DistributionCenter Annual Demand 1 Boston 20,000 2 Atlanta 30,000 3 Houston 30,000 The shipping cost per unit from each plant to each distribution center is as…arrow_forward
- Microcomp is a U.S.-based manufacturer of personal computers. It is planning to build a new manufacturing and distribution facility in either South Korea, China, Taiwan, the Philippines, or Mexico. It will take approximately 5 years to build the necessary infrastructure (roads, etc.), construct the new facility, and put it into operation. The eventual cost of the facility will differ between countries and will even vary within countries depending on the financial, labor, and political climate, including monetary exchange rates. The company has estimated the facility cost (in $1,000,000s) in each country under three different future economic and political climates, as follows: Determine the best decision, using the following decision criteria. a. Minimin b. Minimaxarrow_forwardTri-County Utilities, Inc., supplies natural gas to customers in a three-county area. The company purchases natural gas from two companies: Southern Gas and Northwest Gas. Demand forecasts for the coming winter season are as follows: Hamilton County, 400 units; Butler County, 200 units; and Clermont County, 300 units. Contracts to provide the following quantities have been written: Southern Gas, 500 units; and Northwest Gas, 400 units. Distribution costs for the countries vary, depending upon the location of the suppliers. The distribution costs per unit (in thousands of dollars) are as follows: From Hamilton Butler Clermont Southern Gas 10 20 15 Northwest Gas 12 15 18 Develop a network representation of the distribution system. Develop the objective function and the constraints.arrow_forwardDryIce, Inc. is a manufacturer of air conditioners that has seen its demand grow significantly. The company anticipates nationwide demand for the year 2010 to be 180,000 units in the South; 120,000 units in the Midwest; 110,000 units in the East; and 100,000 units in the West. Managers at DryIce are designing the manufacturing network and have selected four potential sites – New York, Atlanta, Chicago, and San Diego. Plants could have a capacity of either 200,000 or 400,000 units. The annual fixed costs at the four locations are shown in the table below, along with the cost of producing and shipping an air conditioner to each of the four markets. Where should DryIce build its factories and how large should they be? New York Atlanta Chicago San Diego Annual fixed cost of 200,00 plant $6 miilion 5.5 million 5.6 million 6.1 million Annual fixed cost of 400,000 $10 million $9.2 million 9.3 million 10.2 million EAST $211 $232 $238 $299 SOUTH $232 $212…arrow_forward
- Brooke Bentley, a student in business administration, is trying to decide which management science course to take next quarter—I, II, or III. “Steamboat” Fulton, “ Death” Ray, and “Sadistic” Scott are the three management science professors who teach the courses. Brooke does not know who will teach what course. Brooke can expect a different grade in each of the courses, depending on who teaches it next quarter, as shown in the following payoff table: Professor Course Fulton Ray Scott I B D D II C B F III F A…arrow_forwardManagement of AG Travel and Tour has identified two groups of individuals that would be interested in the vacation package consisting of room and board and/or entertainment. The maximum amount that group 1 is willing to pay for room and board is GHC 2500 and for entertainment is GHC 500. For group 2, the maximum amount they are willing to pay for room and board is GHC 1800 and for entertainment is GHC 750. Although AG Travel and Tour is not able to identify members of either group, it does know that each group values the components of the package differently. Assuming there are an equal number of members in each group and that the total membership in each group is a single individual. If the marginal cost of providing the service (room and board and/or entertainment) to each group is GHC 1000. What will be the profit for AG Travel and Tour in the case of (iii) above?arrow_forwardTroop Inc. is considering building a factory in India. The estimated cash flows for the project are given below and management consider that a discount rate of 12% reflects the riskiness of the venture. The Indian government has agreed to purchase the factory at the end of three years operation for Rupees 250 million. Year 0 Year 1 Year 2 Year 3 Total cash inflows (Indian rupees (m)) 0 300 500 600 Total cash outflows (Indian rupees (m)) 800 220 230 280 Increase in US cash inflows (m) 0 2 2 2 Forecast exchange rate Rupees /$ 78.7 78.9 80 80.5 Required:a) Calculate the net present value of the project and advise whether Troop Inc should build the factory. b) Describe the factors Troop Inc. should consider when…arrow_forward
- Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,Operations ManagementOperations ManagementISBN:9781259667473Author:William J StevensonPublisher:McGraw-Hill EducationOperations and Supply Chain Management (Mcgraw-hi...Operations ManagementISBN:9781259666100Author:F. Robert Jacobs, Richard B ChasePublisher:McGraw-Hill Education
- Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage LearningProduction and Operations Analysis, Seventh Editi...Operations ManagementISBN:9781478623069Author:Steven Nahmias, Tava Lennon OlsenPublisher:Waveland Press, Inc.