Decision tree approach, Operation Research

Question:

Spencerville Products is expanding its operations west of the Mississippi.  Its first step is to build a manufacturing facility in Denver to satisfy demand on the West Coast.  Spencerville has an option to build either a large facility that has an annual output of 500,000 units per year or a smaller facility with an output of 250,000 units per year.  It must build one of these two facilities - it does not have any other options.

The expected demand for the company's products is shown as either high or moderate in the table below:

Demand Level                        Annual Demand (units/year)                       Probability

High                                        450,000                                                    0.4

Moderate                                 150,000                                                    0.6

The small facility has a profit of $5.00 per unit.  The large facility has a profit of $4.00/unit.

a) What size facility should Spencerville Products build based on expected values and using a decision tree approach?  You must also provide the decision tree using the appropriate decision tree symbols.

b)  Suppose that the company is not certain about the 450,000 projection for the High Demand scenario.  It could be higher than this projection.  How sensitive is the selection in a) to the High Demand projection.  In other words, at what annual demand for the High Demand scenario would the company be indifferent between the two size facilities?

 

Posted Date: 2/18/2013 12:45:29 AM | Location : United States







Related Discussions:- Decision tree approach, Assignment Help, Ask Question on Decision tree approach, Get Answer, Expert's Help, Decision tree approach Discussions

Write discussion on Decision tree approach
Your posts are moderated
Related Questions
Normal 0 false false false EN-IN X-NONE X-NONE

McColvin's Principles: L.R McColvin advanced his Demand and Supply Theory of Book Selection in 1925. He states, "Books in themselves are nothing. They have no more meaning tha

Maximize Z = 2x - 7y subject -2x + 3y = 3 4x + 5y >= 10 6x + 7y 4x + 8y >= 5

Classification of documents by information Characteristics: The schemes of classification advocated by Hanson and Grogan are mainly based on the information characteristics of

Regression line drawn as Y=C+1075x, when x was 2, and y was 239, given that y intercept was 11. calculate the residual#

can u send me some assigment problems

Consider the following network where the value on each arc represents the capacity of that arc. Use the augmenting path algorithm to find the value of the maximum flow from node 1

Simple Graph The values of the two variables are plotted on a graph paper. We get two curves one for x variables and another for y  variables. These  two curves reveal the dir

Merits a.It is simple  to understand  and easy  to calculate. b.It is very  useful  in the  case of data which  are of  qualitative nature  like  intelligence  honesty  be

A factory employs unskilled workers earning $135 per week and skilled workers earning $270 per week. It is required to keep the weekly age bill below $24,300. The machine requires