Decision tree, Operation Management

Assignment Help:
#questionSpencerville 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?
..

Related Discussions:- Decision tree

What is need of computer aided manufacturing to operations, Q. What is need...

Q. What is need of computer aided manufacturing to manufacturing operations? Computer aided manufacturing (CAM) automates production for illustration programmable and robotic p

Explain expected return on the market, Assume that the risk-free rate is 7....

Assume that the risk-free rate is 7.0% and the expected return on the market is 8%. What is the required rate of return on a stock with a beta of 1.4? Round your answer to two deci

Explain government grants, Assume that the company received no government g...

Assume that the company received no government grants and that all the funding for the company has come from VCs. Add an earlier seed round to replace the government funds, and mak

Explain affect your overall impression of the candidate, How does the use o...

How does the use of music in political play a role in establishing a candidate's brand? Does a candidate's use of a song you like (or dislike) affect your overall impression of the

Explain imagine an athletic facility such as sawhill, 3. Imagine an athleti...

3. Imagine an athletic facility such as Sawhill. What strategies would you suggest for creating an open environment? Sawhill Athletic Club was an athletic facility in suburban S

Decribe an examination-taking work plan, 1 Page maximum for the whole quest...

1 Page maximum for the whole question] : College students are "invincible". They study on the floor, spread their materials on the floor and lean over to access them, slouch in a c

Development of bar chart, Development of Bar Chart The following are ...

Development of Bar Chart The following are significant stages in developing a bar chart: 1)Breakdown: The project into its various activities or jobs or operations each

Explain stakeholders of a company are shareholders, Stakeholders of a compa...

Stakeholders of a company are shareholders, the community, customers, employees, and all of the other parties that have an interest in seeing that the company succeeds. True False

Explain company is operating at full capacity, Develop a decision tree for ...

Develop a decision tree for the case of a company is operating at full capacity and with product demand rising. The choice is between new equipment and overtime. A 20% rise in sale

Someone asists me to write a paper about projected revenues, Someone help m...

Someone help me to write a paper about projected revenues and profits of selling kids bike in botoga Columbia.

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