Reference no: EM131737335

Assignment

1. A machine shop owner must decide between purchasing a new drill press, grinder, lathe, or stamper. The income from each machine will be determined by whether the company succeeds in getting a government contract. The profit (or loss) from each alternative purchase is provided below. Apply the pessimistic Maximin Rule to select the appropriate machine to purchase.

Purchase Contract No Contract
Drill Press 40000 -8000
Grinder 20000 4000
Lathe 15000 10000
Stamper 8000 12000

Lathe
Drill Press
Stamper
Grinder

2. A lawn and garden wholesaler has annual demand of 2,400 ceramic pots. These pots are purchased in lots of 400 units. The cost to place each order is $35 and the holding cost is $4 per pot. Calculate the wholesaler's annual storage cost of ceramic pots.

3. A manager is comparing alternative investments of $100,000. One investment being considered pays 5% interest compounded annually for 7 years. What is the expected future value of this investment at the end of 7 years?

4. A seasonal index for October fuel usage of 109.4 indicates:

Forecasted usage for next October should be 109.4% of this October's level
October usage is forecasted to be 9.4% higher than September usage
October fuel usage averages 9.4% of the total annual usage
October fuel usage averages 9.4% above the long-term trend

5. A reorder system operating under uncertain demand requires:

a Kanban system of inventory control
economic order quantities
variable reorder levels
buffer stock

6. The discount rate is used to account for the timing of a series of cash flows. The discount rate which yields a net present value equal to zero is called the:

accounting rate of return
NPV
discount factor
internal rate of return.

7. A company must decide wheter to construct a medium-size technical facility now, or delay the decision for 12 months to conduct a planning study on whether to build the medium-size facility or a larger facility. If they build now and experience initial high demand, the company has the opportunity to expand. They estimate the probability of high demand this year is 70%. Next year, the probability of high demand is estimated to be 80%. Expected payoff for each decision alternative is given in the decision tree below, along with the probability of a successful timely expansion.

Determine the expected monetary value of the decision to expand or not expand a medium facility (decision alternative 3).

8. Given the following time series, sales trend, and seasonal index, forecast sales for 2018 Q1.

Attachment:- Data.rar