OPERATIONS AND SUPPLY CHAIN MANAGEMENT
9th Edition
ISBN: 9781119448037
Author: Russell
Publisher: WILEY
expand_more
expand_more
format_list_bulleted
Question
Chapter 1.S, Problem 25P
Summary Introduction
To draw: The maximum amount that should be paid to the analyst
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.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
The director of career advising at Grand Valley Commu-nity College wants to use decision analysis to provide in-formation to help students decide which two-year degree
program they should pursue. The director has set up the
following payoff table for six of the most popular and suc-cessful degree programs at GVCC that shows the estimated
five-year gross income ($) from each degree for four futureeconomic conditions:Determine the best degree program in terms of projectedincome, using the following decision criteria:a. Maximaxb. Maximinc. Equal likelihoodd. Hurwicz ( .25)
Economic ConditionsDegree Program Recession Average Good RobustGraphic Design 115,000 155,000 190,000 220,000Nursing 140,000 175,000 210,000 225,000Real Estate 95,000 135,000 230,000 350,000Medical Technology 120,000 180,000 210,000 270,000Culinary Technology 85,000 125,000 180,000 290,000Computer InformationTechnology 125,000 160,000 200,000 260,000
In the following scenarios, you will be given a product and an event. Determine If there will be an increase OR decrease in either the supply OR demand, what happens to the price of the product, and what happens to the quantity bought and sold. The first two are answered for you as examples.
EXAMPLE 1.
Oil. New oil fields are discovered by new companies in Canada
EX 1 ANSWER Supply increases, price decreases, quantities increase
EXAMPLE 2
Penguin merchandise. The Penguins play well and contend for a playoff spot.
EX 2 ANSWER Demand increases, price increases, quantities decrease
1. Yankees tickets. The Yankees built a new stadium that has 10,000 fewer seats.
2. Spam (Inferior good) . People’s incomes increase.
3. Foreign cars. The government places an excise tax on all foreign cars
produced in the U.S.
4. Jelly.…
Place-Plus, a real estate development firm, is considering several alternative development projects. These include building and leasing an office park, purchasing a parcel of land, and building an office building to rent, buying and leasing a warehouse, building a strip mall, and building and selling condominiums. The financial success of these projects depends on interest rate movement in the next 5 years. The various development projects and their 5-year financial return (in €1,000,000s) given that interest rates will decline, remain stable, or increase, are shown in the following image of the payoff table:
a)
Place-Plus is dissatisfied with the economist’s estimate of the probabilities of future interest rate movement, so it is considering having a financial consulting firm provide a report on future interest rates. The consulting firm can cite a track record which shows that 80% of the time when interest rates declined, it had predicted they would, whereas 10% of the time when…
Chapter 1 Solutions
OPERATIONS AND SUPPLY CHAIN MANAGEMENT
Ch. 1.S - Prob. 1PCh. 1.S - Prob. 2PCh. 1.S - Prob. 3PCh. 1.S - Prob. 4PCh. 1.S - Prob. 5PCh. 1.S - In Problem S1-5 assume that Nicole, with the help...Ch. 1.S - Prob. 7PCh. 1.S - Prob. 8PCh. 1.S - Telecomp, a computer manufacturer with a global...Ch. 1.S - Prob. 10P
Ch. 1.S - Prob. 11PCh. 1.S - Prob. 12PCh. 1.S - Prob. 13PCh. 1.S - Prob. 14PCh. 1.S - Prob. 15PCh. 1.S - Prob. 16PCh. 1.S - Prob. 17PCh. 1.S - Prob. 18PCh. 1.S - In Problem S1-18, assume the Weight Club is able...Ch. 1.S - Prob. 20PCh. 1.S - Prob. 21PCh. 1.S - Prob. 22PCh. 1.S - Prob. 23PCh. 1.S - Prob. 24PCh. 1.S - Prob. 25PCh. 1.S - Prob. 26PCh. 1.S - Prob. 27PCh. 1.S - Prob. 28PCh. 1.S - Prob. 29PCh. 1.S - Prob. 30PCh. 1.S - Prob. 31PCh. 1.S - Prob. 33PCh. 1.S - Prob. 34PCh. 1.S - Alex Mason has a wide-curving, uphill driveway...Ch. 1.S - Prob. 36PCh. 1.S - Prob. 39PCh. 1.S - Prob. 40PCh. 1.S - State University has three healthcare plans for...Ch. 1.S - The Orchard Wine Company purchases grapes from one...Ch. 1.S - Prob. 43PCh. 1.S - Prob. 1.1CPCh. 1.S - Prob. 2.1CPCh. 1.S - Evaluating Projects at Nexcom Systems Nexcom...Ch. 1 - Feeding America Each year, the Feeding America...Ch. 1 - Feeding America Each year, the Feeding America...Ch. 1 - Feeding America Each year, the Feeding America...Ch. 1 - Feeding America Each year, the Feeding America...Ch. 1 - Prob. 1QCh. 1 - What constitutes operations at (a) a bank, (b) a...Ch. 1 - Prob. 3QCh. 1 - Prob. 4QCh. 1 - Prob. 5QCh. 1 - Prob. 17QCh. 1 - What is the difference between an order winner and...Ch. 1 - Prob. 21QCh. 1 - Prob. 22QCh. 1 - Prob. 23QCh. 1 - Prob. 24QCh. 1 - Prob. 1PCh. 1 - Prob. 2PCh. 1 - Prob. 3PCh. 1 - Prob. 4PCh. 1 - Prob. 5PCh. 1 - Omar Industries maintains production facilities in...Ch. 1 - Rushing yardage for three Heisman Trophy...Ch. 1 - Carpet City recorded the following data on carpet...Ch. 1 - Prob. 9PCh. 1 - Prob. 10PCh. 1 - Prob. 11PCh. 1 - Prob. 12PCh. 1 - Prob. 13PCh. 1 - Prob. 14PCh. 1 - Prob. 15PCh. 1 - Prob. 1.1CPCh. 1 - Prob. 1.2CPCh. 1 - Prob. 1.3CPCh. 1 - Prob. 1.4CPCh. 1 - Prob. 1.5CPCh. 1 - Prob. 2.1CPCh. 1 - Prob. 2.2CP
Knowledge Booster
Similar questions
- Management 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_forwardIn the following scenarios, you will be given a product and an event. Determine If there will be an increase OR decrease in either the supply OR demand, what happens to the price of the product, and what happens to the quantity bought and sold. The first two are answered for you as examples. EXAMPLE! 1 New oil fields are discovered by new companies in Canada EX 1 ANSWER Supply increases, price decreases, quantities increase EXAMPLE! 2 Penguin merchandise. The Penguins play well and contend for a playoff spot. EX 2 ANSWER Demand increases, price increases, quantities decrease 1. Beef. The price of chicken suddenly drops. 2. Newly constructed houses. The price of lumber doubles. 3. The government places a 30% excise tax on alcohol. 4. Peanut butter cookies. The price of chocolate chip cookies increases. 5. Pepsi.…arrow_forwardA global economist hired by Telecomp, the U.S.-basedcomputer manufacturer in Problem S1-1, estimates that the probability that the economic and political climate over-seas and in Mexico will decline during the next five years is 0.30, the probability that it will remain approximatelythe same is 0.40, and the probability that it will improve is 0.30. Determine the best country to construct the new facil-ity in and the expected value of perfect information.arrow_forward
- During the year, Brownout Company experienced the following power outages:Number of Power Outages Per Month Number of Months 0 3 1 2 2 4 3 3 12Each power outage results in out of pocket costs of P400. For P500 per month, the company can lease an auxiliary generator to provide power during outages. If the company leases an auxiliarygenerator next year, the estimated savings (or…arrow_forwardBrooke 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_forwardA farmer in Georgia must decide which crop to plant next year on his land: corn, peanuts, or soybeans. The return from each crop will be determined by whether a new trade bill with Russia passes the Senate. The profit the farmer will realize from each crop, given the two possible results on the trade bill, is shown in the following payoff table: Trade Bill Crop Pass Fail Corn $35,000 $ 8,000 Peanuts 18,000 12,000 Soybeans 22,000 20,000 Determine the best crop to plant, using the following decision criteria. a. Maximax b. Maximin c. Minimax regret d. Hurwicz e. Equal likelihoodarrow_forward
- Dillon 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_forwardSihlalangenkani is a small town (with approximately 7 000 inhabitants) on the Sishen–Saldanha Makhushushu railway line in the Western Cape. It is located in a fish farming area. There is a local school (pre-primary to Grade 12) with 710 learners. The town is due for a R50 million development grant from the provincial government. The town square is built around the historic railway station and contains several stores, a co-op, a hotel and churches representing several denominations. NCIS is a highly profitable iron and steel works company (with 1 000 employees) that has been based in the town since 1963. It is in the process of considering a relocation of the plant to Drakenstein, 200 km from Sihlalangenkani. Should the relocation become reality, the company will merge its operations with the company’s other, much bigger, plant and head office in Drakenstein. Initial projections indicate a turnover growth of 20% and an effective dividend growth (payable to shareholders) of 40% over the…arrow_forwardA local real estate investor in Kingston is considering three alternative investments: a motel, a restaurant, or a theater. Profits from the motel or restaurant will be affected by the availability of gasoline and the number of tourists; profits from the theater will be relatively stable under any conditions. The following payoff table shows the profit or loss that could result from each investment: Real Estate Investor Payoff Table Payoffs are Profits States of Nature (Gasoline Availability) Decision Alternatives Shortage Stable Supply Surplus Motel $–8,000 $15,000 $22,000 Restaurant $2,000 $8,000 $6,000 Theater $6,000 $6,000 $5,000 Which option should the real estate investor choose if he uses the LaPlace criterion? Using…arrow_forward
- Dwayne Whitten, president of Whitten Industries, is considering whether to build a manufacturing plant in north Texas. His decision is summarized in the following table: Alternatives Favorable Market Unfavorable Market Build large plant $400,000 −$300,000 Build small plant $120,000 −$15,000 Don't Build $0 $0 Market Probability 0.40 0.60 a) The correct decision tree for Dwayne is shown in Figure ____ (all payoffs are in thousands). b) To maximize the return, Dwayne's decision should be to ______ . c) For Dwayne, the expected value of perfect information (EVPI) = $___________ (enter your answer as a whole numarrow_forwardProblem 8-21 (Algorithmic) Round Tree Manor is a hotel that provides two types of rooms with three rental classes: Super Saver, Deluxe, and Business. The profit per night for each type of room and rental class is as follows: Rental Class Room Super Saver Deluxe Business Type I $30 $35 — Type II $20 $30 $40 Type I rooms do not have wireless Internet access and are not available for the Business rental class. Round Tree's management makes a forecast of the demand by rental class for each night in the future. A linear programming model developed to maximize profit is used to determine how many reservations to accept for each rental class. The demand forecast for a particular night is 130 rentals in the Super Saver class, 60 rentals in the Deluxe class, and 50 rentals in the Business class. Round Tree has 100 Type I rooms and 120 Type II rooms. Use linear programming to determine how many reservations to accept in each rental class and how the reservations should be…arrow_forwardAfter reading about economic predictions, Debbie Gibson (see problem #4) has assigned the probabilities that the economy will be strong, average, and weak at 0.2, 0.35, and 0.45 respectively. a) Using EMVs, what option should Debbie choose? What is the maximum EMV? b) Using EOL, what option should Debbie choose? What is the minimum EOL? c) Compute the EVPI and show that it is the same as the minimum EOL. For Reference: (Problem # 4) Debbie Gibson is considering three investment options for a small inheritance that she has just received-stocks, bonds, and money market. The return on her investment will depend on the performance of the economy, which can be strong, average, or weak. If the market is strong her returns are 9% for stocks, 6% for bonds and 4% for money market. If the market is average her returns are 5% for stocks, 4% for bonds and 6% for money market. If the market is weak her returns are -7% for stocks, 2% for bonds and 1% for money market.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,