Principles of Operations Management: Sustainability and Supply Chain Management (10th Edition)
10th Edition
ISBN: 9780134181981
Author: Jay Heizer, Barry Render, Chuck Munson
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 5, Problem 26P
Summary Introduction
To prepare: Modified decision tree and find the payoff and branch with the greatest EMV.
Introduction: Expected monetary value (EMV) is a calculation system for expected returns for the certain decision made by a company.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Typed solution
The product design group of Iyengar Electric Supplies, Inc., has determined that it needs to design a new series of switches. It must decide on one of three design strategies. The market forecast is for
200,000
units. The better and more sophisticated the design strategy and the more time spent on value engineering, the less will be the variable cost. The chief of engineering design, Dr. W. L. Berry, has decided that the following costs are a good estimate of the initial and variable costs connected with each of the three strategies explained below.
Low-tech:
a low-technology, low-cost process consisting of hiring several new junior engineers. This option has a fixed cost of
$40,000 and variable-cost probabilities of 0.5 for $0.56, 0.1 for $0.47,and 0.4 for $0.41.
Subcontract: a medium-cost approach using a good outside design staff. This approach would have a fixed cost of
$75,000 and variable-cost probabilities of 0.7 of $0.49, 0.2 of $0.46, and…
Walton, Inc. is unsure whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $32, while the cost of assembling each unit is estimated at $34. Unassembled units can be sold for $110, while assembled units could be sold for $142 per unit. What decision should Walton make?
Ritz Products's materials manager, Tej Dhakar, must determine whether to make or buy a new semiconductor for the wrist TV that the firm is about to produce. One million units are expected to be produced over the life cycle. If the product is made, start-up and production costs of the make decision total $3 million, with a probability of
0.4 that the product will be satisfactory and a 0.6 probability that it will not. If the product is not satisfactory, the firm will have to reevaluate the decision. If the decision is reevaluated, the choice will be whether to spend another $3 million to redesign the semiconductor or to purchase. Likelihood of success the second time that the make decision is made is 0.8. If the second make decision also fails, the firm must purchase. Regardless of when the purchase takes place, Dhakar's best judgment of cost is that Ritz will pay $0.40 for each purchased semiconductor plus $2 million in vendor development cost.
Part 2
a) Assuming that…
Chapter 5 Solutions
Principles of Operations Management: Sustainability and Supply Chain Management (10th Edition)
Ch. 5.S - Prob. 1DQCh. 5.S - Prob. 2DQCh. 5.S - Prob. 3DQCh. 5.S - Discuss the 3 Rs.Ch. 5.S - Prob. 5DQCh. 5.S - Prob. 6DQCh. 5.S - Prob. 7DQCh. 5.S - Prob. 1PCh. 5.S - Prob. 2PCh. 5.S - Prob. 3P
Ch. 5.S - Prob. 4PCh. 5.S - Prob. 5PCh. 5.S - Prob. 6PCh. 5.S - Prob. 7PCh. 5.S - Prob. 8PCh. 5.S - Prob. 9PCh. 5.S - Prob. 10PCh. 5.S - A Southern Georgia school district is considering...Ch. 5.S - Prob. 12PCh. 5.S - Prob. 13PCh. 5.S - Prob. 14PCh. 5.S - Prob. 15PCh. 5.S - Prob. 16PCh. 5.S - Prob. 17PCh. 5.S - Prob. 18PCh. 5.S - Prob. 19PCh. 5.S - Prob. 1.1VCCh. 5.S - Prob. 1.2VCCh. 5.S - Prob. 1.3VCCh. 5.S - Prob. 2.1VCCh. 5.S - Prob. 2.2VCCh. 5.S - Prob. 2.3VCCh. 5 - Prob. 1EDCh. 5 - Prob. 1DQCh. 5 - What techniques do we use to define a product? ...Ch. 5 - Prob. 3DQCh. 5 - Prob. 4DQCh. 5 - Prob. 5DQCh. 5 - Prob. 6DQCh. 5 - Describe four organizational approaches to product...Ch. 5 - Explain what is meant by robust design.Ch. 5 - Prob. 9DQCh. 5 - What information is contained in a bill of...Ch. 5 - What information is contained in an engineering...Ch. 5 - What information is contained in an assembly...Ch. 5 - Prob. 13DQCh. 5 - Explain how the house of quality translates...Ch. 5 - Prob. 15DQCh. 5 - Prob. 16DQCh. 5 - Why are the direct interaction and surrogate...Ch. 5 - Prob. 18DQCh. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - Construct a house of quality matrix for a...Ch. 5 - Prob. 5PCh. 5 - Prob. 6PCh. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Prepare a bill of material for (a) a pair of...Ch. 5 - Prob. 10PCh. 5 - Prepare a script for telephone callers at the...Ch. 5 - Prob. 12PCh. 5 - Prob. 18PCh. 5 - Review strategic process positioning options for...Ch. 5 - Select a service business that involves...Ch. 5 - Prob. 21PCh. 5 - Prob. 22PCh. 5 - Residents of Mill River have fond memories of ice...Ch. 5 - Prob. 24PCh. 5 - Prob. 25PCh. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 1CSCh. 5 - Prob. 2CSCh. 5 - Prob. 3CSCh. 5 - Prob. 1VCCh. 5 - Prob. 2VCCh. 5 - Prob. 3VCCh. 5 - Prob. 4VC
Knowledge Booster
Similar questions
- Ritz Products’s materials manager, Tej Dhakar, mustdetermine whether to make or buy a new semiconductor for thewrist TV that the firm is about to produce. One million unitsare expected to be produced over the life cycle. If the product ismade, start-up and production costs of the make decision total$1 million, with a probability of .4 that the product will be satisfactory and a .6 probability that it will not. If the product isnot satisfactory, the firm will have to reevaluate the decision. Ifthe decision is reevaluated, the choice will be whether to spendanother $1 million to redesign the semiconductor or to purchase.Likelihood of success the second time that the make decision ismade is .9. If the second make decision also fails, the firm mustpurchase. Regardless of when the purchase takes place, Dhakar’sbest judgment of cost is that Ritz will pay $.50 for each purchasedsemiconductor plus $1 million in vendor development cost.a) Assuming that Ritz must have the semiconductor (stopping…arrow_forwardConsider the conceptual design case study presented in the unit (Moggill Rd. / Coonan St. intersection upgrade). What additional information would you expect to be included in the actual project documents generated by the project team? Safety critical recalls on cars being particularly newsworthy. Such recall of products due to safety concerns are costly to the organisation responsible and may damage reputation and consumer confidence. In terms of the Acquisition phase activities and artifacts, what caused such errors to occur? What strategies do you think that they could have taken to prevent these sorts of errors?arrow_forwardWhat are four types of feasibility? Which type focuses on total cost of ownership? Which type is influenced primarily by users?arrow_forward
- Ritz Products's materials manager, Tej Dhakar, must determine whether to make or buy a new semiconductor for the wrist TV that the firm is about to produce. Three million units are expected to be produced over the life cycle. If the product is made, start-up and production costs of the make decision total $1 million, with a probability of 0.5 that the product will be satisfactory and a 0.5 probability that it will not. If the product is not satisfactory, the firm will have to reevaluate the decision. If the decision is reevaluated, the choice will be whether to spend another $1 million to redesign the semiconductor or to purchase. Likelihood of success the second time that the make decision is made is 0.8. If the second make decision also fails, the firm must purchase. Regardless of when the purchase takes place, Dhakar's best judgment of cost is that Ritz will pay $0.40 for each purchased semiconductor plus $2 million in vendor development cost. a) Assuming that Ritz…arrow_forwardMcBurger, Inc., wants to redesign its kitchensto improve productivity and quality. Three designs, calleddesigns K1, K2, and K3, are under consideration. No matterwhich design is used, daily production of sandwiches at a typi-cal McBurger restaurant is for 500 sandwiches. A sandwichcosts $1.30 to produce. Non-defective sandwiches sell, on theaverage, for $2.50 per sandwich. Defective sandwiches cannotbe sold and are scrapped. The goal is to choose a design thatmaximizes the expected profit at a typical restaurant overa 300-day period. Designs K1, K2, and K3 cost $100,000,$130,000, and $180,000, respectively. Under design K1, thereis a .80 chance that 90 out of each 100 sandwiches are non-defective and a .20 chance that 70 out of each 100 sandwichesare non-defective. Under design K2, there is a .85 chance that90 out of each 100 sandwiches are non-defective and a .15chance that 75 out of each 100 sandwiches are non-defective.Under design K3, there is a .90 chance that 95 out of each…arrow_forwardOk base on my fishbone diagram I prepared I need help preparing an Analysis of the following: Elements of “chaos,” identified through your 5 Whys or Fishbone diagram, that can be turned into “butterfly effects” or potential large-scale strategic opportunities for your organization providing Potential opportunities for projects that apply creativity in the solution of identified “chaotic” issues or problems within the organization And Potential leverage points that will help the organization build on a strength(s) to take advantage of strategic opportunitiesarrow_forward
- How does quality planning differ depending on the criteria for functionality, system output, performance, dependability, and maintainability?arrow_forwardAt the end of 20x1, Mejorar Company implemented a low-cost strategy to improve its competitive position. Its objective was to become the low-cost producer in its industry. A Balanced Scorecard was developed to guide the company toward this objective. To lower costs, Mejorar undertook a number of improvement activities such as JIT production, total quality management, and activity-based management. Now, after two years of operation, the president of Mejorar wants some assessment of the achievements. To help provide this assessment, the following information on one product has been gathered: Required:1. Compute the following measures for 20x1 and 20x3:a. Actual velocity and cycle timeb. Percentage of total revenue from new customers (assume one unit per customer)c. Percentage of very satisfied customers (assume each customer purchases one unit)d. Market sharee. Percentage change in actual product cost (for 20x3 only)f. Percentage change in days of inventory (for 20x3 only)g. Defective…arrow_forwardAt the end of 20x1, Mejorar Company implemented a low-cost strategy to improve its competitive position. Its objective was to become the low-cost producer in its industry. A Balanced Scorecard was developed to guide the company toward this objective. To lower costs, Mejorar undertook a number of improvement activities such as JIT production, total quality management, and activity-based management. Now, after two years of operation, the president of Mejorar wants some assessment of the achievements. To help provide this assessment, the following information on one product has been gathered: 20x1 20x3 Theoretical annual capacity* 249,600 249,600 Actual production** 208,000 234,000 Market size (in units sold) 1,300,000 1,300,000 Production hours available (40 workers) 104,000 104,000 Very satisfied customers 62,400 117,000 Actual cost per unit $340 $272 Days of inventory 14 7 Number of defective units 12,480 7,020 Total worker…arrow_forward
- a. distinguish between systems design and systems quality. what challenges are there? b. describe the relationship between design capacity, system capacity, and actual output. how can you ensure a projected output is within the boundaries of the design capacity and system capacity?arrow_forwardBy 2010, Airbus was projecting to deliver 93 A380s. Instead, because of delays associated with installation misdesign for the electrical harnesses, Airbus delivered only 10 planes. The cost of the delay added $6 billion to the overall development costs to be recovered. That implies the break-even production run has now risen from 250 to over 300 planes. The company has produced 45 planes each of the last two years. What about the history of Boeing’s 747 production run that suggests the Airbus 380 may still be a considerable success?arrow_forwardDoes the House of Quality Sequence indicate how to Deploy Resources to achieve customer requirements? How?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,
Operations ManagementOperations ManagementISBN:9781259667473Author:William J StevensonPublisher:McGraw-Hill Education
Operations 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 Learning
Production and Operations Analysis, Seventh Editi...Operations ManagementISBN:9781478623069Author:Steven Nahmias, Tava Lennon OlsenPublisher:Waveland Press, Inc.
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,
Operations Management
Operations Management
ISBN:9781259667473
Author:William J Stevenson
Publisher:McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi...
Operations Management
ISBN:9781259666100
Author:F. Robert Jacobs, Richard B Chase
Publisher:McGraw-Hill Education
Purchasing and Supply Chain Management
Operations Management
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Cengage Learning
Production and Operations Analysis, Seventh Editi...
Operations Management
ISBN:9781478623069
Author:Steven Nahmias, Tava Lennon Olsen
Publisher:Waveland Press, Inc.