decision theory, Operation Management, History

Assignment Help:
Write question herA firm must decide whether to construct a small, medium, or large stamping plant. A consultant’s report indicates a .20 probability that demand will be low and an .80 probability that demand will be high.


If the firm builds a small facility and demand turns out to be low, the net present value will be $41 million. If demand turns out to be high, the firm can either subcontract and realize the net present value of $41 million or expand greatly for a net present value of $46 million.


The firm could build a medium-size facility as a hedge: If demand turns out to be low, its net present value is estimated at $17 million; if demand turns out to be high, the firm could do nothing and realize a net present value of $46 million, or it could expand and realize a net present value of $58 million.


If the firm builds a large facility and demand is low, the net present value will be -$16 million, whereas high demand will result in a net present value of $76 million.


b. What is the maximin alternative? (Enter your answers in millions rounded to nearest whole number. Negative amount should be indicated by a minus sign. Omit the "$" sign in your response.)



Build a large facility $ million.
Build a small facility $ million.

--------------------------------------------------------------------------------


c. Compute the EVPI. (Enter your answers in millions of dollars rounded to 2 decimal places. Omit the "$" sign in your response.)



EVPI $ million.

--------------------------------------------------------------------------------


d. Perform sensitivity analysis on P (high). (Round "x" answer to 2 decimal places. Negative amount should be indicated by a minus sign.)


I Small + x
II Medium + x
III Large + x

--------------------------------------------------------------------------------


e

Related Discussions:- decision theory, Operation Management

Premodern history is significant, Explain in 5-paragraphs A. why you think ...

Explain in 5-paragraphs A. why you think the study of ancient and B. premodern history is significant? C. What are some examples from ancient history that we have studied that we c

British mobilized troops not only from the united kingdom, In World War I, ...

In World War I, the British mobilized troops not only from the United Kingdom, but also from Australia, India, and New Zealand. True or False?

Impact the native american communities and why, How did the Spanish Borderl...

How did the Spanish Borderlands & the French Crescent impact the Native American communities and why?

Loss to african american history, What was whitney houston's contribution t...

What was whitney houston's contribution to the entertainment Industry and her loss to african american history. Only answer in 1 paragraph, and only answer the question nothing

Political tensions at the turn of the century, Determine what effect did th...

Determine what effect did the depression of the 1890s have on the political tensions at the turn of the century?

Issue advocacy advertising funds by federal law, Issue Advocacy Advertising...

Issue Advocacy Advertising funds are not regulated by federal law.

Explain the concept of hierarchy, Explain the concept of hierarchy as it ap...

Explain the concept of hierarchy as it applied to power and leadership in the ancient world. Are there any distinct differences between the operation of this concept as it applies

How did the spanish conquer the incas and aztecs, Despite all having well-d...

Despite all having well-developed city-states, how did the Spanish conquer the Incas and Aztecs so easily?

Who is an american citizen, Who is an American Citizen? A citizen is a ...

Who is an American Citizen? A citizen is a member of a nation or political community, who owes allegiance to that nation and is in turn entitled to benefits and protection from

Decades of cold war, why was it that the so-called Grand Alliance--US, U.S....

why was it that the so-called Grand Alliance--US, U.S.S.R and U.K-- managed to stick together during the World War Two, but split apart soon thereafter, bringing on more than four

Write Your Message!

Captcha
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!

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