User Account

All Pages

What is the evpi

Assignment Help Operation Management
Reference no: EM1381323

An appliance dealer must decide how many (if any) new microwave ovens to order for next month. The ovens cost $220 and sell for $300. Because the oven company is coming out with a new product line in two months, any ovens not sold next month will have to be sold at the dealers half price clearance sale. Additionally, the appliance dealer feels he suffers a loss of $25 for every oven demanded when he is out of stock. On the basis of past months sales data, the dealer estimates the probabilities of monthly demand (D) for 0, 1, 2, or 3 ovens to be .3, .4, .2, and .1, respectively. The dealer is considering conducting a telephone survey on the customers atti- tudes towards microwave ovens.

The results of the survey will either be favorable (F), unfavorable (U) or no opinion (N). The dealers probability estimates for the survey results based on the number of units demanded are:
P ( F I D = 0) = : 1
P ( F I D = 2) = : 3
P ( U I D = 0) = : 8
P ( U I D = 2) = : 1
P ( F I D = 1) = : 2
P ( F I D = 3) = : 9
P ( U I D = 1) = : 3
P ( U I D = 3) = : 1

a. What is the dealers optimal decision without conducting the survey?

b. What is the EVPI?

c. Based on the survey results what is the optimal decision strategy for the dealer?

d. What is the maximum amount he should pay for this survey?

Reference no: EM1381323

Questions Cloud

Safety regulations require that the time between airplane : Safety regulations require that the time between airplane takeodds will be at lteast 3 minutes. When taking off, the run time of an airplance ont he runwy is 45 seconds.
Identify one example of a resource with a very low average : Identify one example of a resource with a very low average utilization rate, and a second example with a very high average utilization rate.
Identify and describe the benefits that outsourcing logistic : Identify and describe the benefits that outsourcing logistics will bring to the organizations. List and describe the directives to consider the process of outsourcing if you are a senior manager
Biochemistry-michaelis menten eqn problem : Biochemistry-michaelis menten eqn problem
What is the evpi : What is the dealers optimal decision without conducting the survey? What is the EVPI? Based on the survey results what is the optimal decision strategy for the dealer?
Suppose you are opening a health insurance brokerage firm : Suppose you are opening a health insurance brokerage firm and want to market your services to small businesses with fewer than 50 employees
Determine molarity of the solution : The molecular weight of "Y" is two hundred. I use 10g of "Y" in 10mL of water. What is the molarity of this solution of "Y"? What percentage solution of "Y" is it?
What are the reasons for the lack of coordination : What are the reasons for the lack of coordination that sometimes exists between advertising executives and field sales managers?
Lenses and the magnifying power of the microscope : Calculate the separation between the lenses and the magnifying power of the microscope?

Reviews

Write a Review

Operation Management Questions & Answers

  Decide the economic order quantity

A large bakery buys flour in 25-pound bags. The bakery uses an average of 1,215 bags a year. Preparing an order and receiving a shipment of flour involves a cost of $10 per order. Yearly carrying costs are $75 per bag.

  Explain what is meant by project programming

From project's perspective, main areas of concern are project scoping, project programming and project autonomy. In your own words, explain what is meant by project programming.

  Classify driving forces that are operating to alter industry

n doing driving forces analysis, is it sufficient to simply classify driving forces that are operating to alter industry and competitive conditions.

  Elucidate how do the required skills differ for someone work

Elucidate how do the required skills differ for someone working in a factory. Illustrate what are the implications for hiring criteria also training.

  Identification of changes which need to be made

Identification of changes which need to be made also a reason for change. Identification also description of human implications, potential resistance factors,

  Linear programming model for delicious apple company

The Delicious Apple Company has orchards in Red City, Golden, and Macville Estimated amounts of apples to be available from the three orchards are the following-Solve the problem for optimal answer and provide the value of the objective function an..

  Illustrate what risk of stock out would result

Design a model with methods also procedures for analyzing diversity also elucidate how you would implement results in a cultural diversity training program. Illustrate what risk of stock out would result from a decision not to have any safety stock..

  Hono golf is a manufacturer of golf products

Hono Golf is a manufacturer of golf products in Taiwan and China. One of the golf accessories it produces at its plant in Tainan Hsing, Taiwan, is plastic golf tees. The injector molder produces golf tees that are designed to have an average heigh..

  Explain how many slots should wzmu sell in advance

Now suppose that if a slot is not sold in advance and is not sold at last minute, it may be used for a promotional message worth $2500. Now explain how many slots should WZMU sell in advance.

  The business world today is increasingly complex

The business world today is increasingly complex and variable in virtually every country and industry, How do you define an organic organization and a mechanistic organization?

  Illustrate percentage of parts will not meet weight specific

Illustrate what percentage of parts will not meet weight specifications. Within illustrate what values will 95.44 percent pf sample means of process fall, if samples of n=16 are taken also process is in control (random).

  Four essential elements of contract

Identify and define each of the four essential elements of a contract. Use the facts of the case to explain whether each of these elements is present and whether a contract has been formed.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd