Reference no: EM133414604

Question 1:

The owner of a small specialty food store stocks specially aged steak. In the past 100 weeks, the store has experienced the following weekly demand for this steak (in pounds):

The owner buys the meat from his supplier for $2.10 per pound and sells the steak for
$5.00 per pound. All that is left unsold at the end of the week is sold at a discount to the county animal shelter at $0.50 per pound.

The food store owner wants to know how many pounds of steak to consistently order per week.

NOTE: In parts 13, 14, and 23 you MUST provide copies of your tables and of your Excel spreadsheet containing your calculations for this problem to receive credit for problem B. You are also reminded to submit all of your computer files for this problem with your completed exam to the "Final Exam" link on Bb. Failure to provide any of these deliverables will result in this problem NOT being scored.

1. Build the payoff table for this decision situation.

2. Build the regret table for this decision situation.

3. a. In new lines entered below this part, state the best (that is, the optimal) decision according to the expected value criterion for the appropriate number of pounds of steak to consistently stock.

b. In new lines entered below this part, state the dollar amount of the profit expected from this decision.

4. a. In new lines entered below this part, state the decision alternative indicated by the maximum likelihood criterion.
b. In new lines entered below this part, state the dollar amount of the profit from the maximum likelihood decision.

5. In new lines entered below this part, answer the following question: Are the decisions alone (not including the payoffs) of parts 15 and

6 the same? (Yes or no.) Whether they agree or not, explain why. (Failure to explain why will be penalized.)
Assume now that the probabilities given above are no longer valid.

7. a. In new lines entered below this part, state the best decision if the owner is an optimist.
b. In new lines entered below this part, state the payoff from the best decision if the owner is an optimist.

8. a. In new lines entered below this part, state the best decision if the owner wants to minimize his largest possible regret.
b. In new lines entered below this part, state the payoff from the best decision from using the above decision-making criterion.

9. a. In new lines entered below this part, state the best decision if the owner is a pessimist.
b. In new lines entered below this part, state the payoff from the best decision is a pessimist.

10. a. In new lines entered below this part, state the best decision if the owner wants to hedge between optimism and pessimism by using a coefficient of optimism with the numerical value of 0.60.
b. In new lines entered below this part, state the payoff from the best decision using the above decision-making criterion.

11. In new lines entered below this part, state the dollar amount the owner should be willing to pay to improve the decision over the best decision found in part 15 above.

12. In a space created below this part, you must present HERE a copy of your Excel spreadsheet for problem B.

AND submit all of your computer files for this problem with your completed exam to the "Final Exam" link on Bb. Include in the filename/tab name "Prob B."C_ The management at XYZ Corporation needs to know the profit per unit sold of a new product. The new product is priced to sell for $45 per unit. The costs incurred in bringing this new product to market are for production, labor, and transportation (shipping). Empirical probability distributions for the purchase cost, labor cost, and transportation cost (all on a per unit basis) are as follows:

 

Note: Profit = Selling Price - Purchase Cost - Labor Cost - Transportation Cost

NOTE: In parts 25 and 28 you MUST provide a copy of your Excel simulation and of your Excel calculations for problem C to receive credit for this problem. You are also reminded to submit all of your computer files for this problem with your completed exam to the "Final Exam" link on Bb. Failure to provide any of these deliverables will result in this problem NOT being scored.

13. a. In new lines entered below this part, state the calculated profit per unit for the base-case using the most likely costs.
b. In new lines entered below this part, state the calculated profit per unit for the best case.
c. In new lines entered below this part, state the calculated profit per unit for the worst case.

14. Simulate the profit per unit by performing 20 random trials for each individual cost.
In a space created below this part, you must present HERE a copy of your Excel simulation for problem C.

• AND submit all of your computer files for this problem with your completed exam to the "Final Exam" link on Bb. Include in the filenames "Prob C."

15. On the basis of your simulation in part 25,
a. In new lines entered below this part, state to the nearest penny the mean profit per unit.
b. In new lines entered below this part, state to the nearest penny the profit variability per unit as measured by the standard deviation.
c. In new lines entered below this part, state to the nearest penny the lower limit of the 95% confidence interval for mean profit.
d. In new lines entered below this part, state to the nearest penny the upper limit of the 95% confidence interval for mean profit.

16. Management believes that this product will not be sufficiently profitable to warrant the investment in bringing it to market if the profit is less than $5 per unit. On the basis of your simulation, is the product profitable enough to satisfy management's criterion? Explain.

17. In a space created below this part, you must present HERE a copy of your Excel spreadsheet for problem C.
• AND submit all of your computer files for this problem with your completed exam

Question 2.

The operations manager for a large law office must choose between two different copiers to lease. A regular copier, which costs $8 per hour to lease, can complete a copying job in 6 minutes, on average. On average, a high-speed copier, which leases for $16 per hour, can complete a copying job in 3 minutes. In a workday of 8 hours, 56 copying jobs can be expected. The time of the employees tasked with copying is valued at $10 per hour.

NOTE: In part 35 you MUST provide a copy of your Excel calculations for problem D to receive credit for this problem. You are also reminded to submit all of your computer files for this problem with your completed exam to the "Final Exam" link on Bb. Failure to provide either of these deliverables will result in this problem NOT being scored.

18. For a regular copier, in new lines entered below this part, state the number of employees that can be expected to be at the copier, both waiting on the line and using the machine.

19. On an hourly basis, in new lines entered below this part, state the total cost of the regular copier.

20. For a high-speed copier, in new lines entered below this part, state the total number employees that can be expected to be at the copier, both those waiting on the line and those using the machine.

21. On an hourly basis, in new lines entered below this part, state the total cost of the high-speed copier.

22. a. On the basis of total hourly cost, in new lines entered below this part, state which copier, the regular model or the high-speed model, should be selected by the operations manager chose. Explain why.
b. For the copier selected in the above part, in new lines entered below this part, state the amount of that is saved in an 8-hour workday.

23. a. In new lines entered below this part, state what had to be assumed to calculate how long the copying jobs take.
b. In new lines entered below this part, state what had to be assumed to calculate how many employees need to use a copier at any given time.

24. In a space created below this part, you must present HERE a copy of your Excel spreadsheet for problem D.

Question 3.

The Pioneer Software Company has developed software for organizing and playing music on a computer. The software contains a number of unique features that have been patented so the company's future has looked bright.

However, it appears that a number of the patented features were copied in similar software developed by the Raider Digital Company, a huge software company with annual sales revenue in excess of $1 billion. The executives of Pioneer Software are distressed that Raider Digital has stolen their ideas; they fear that Raider's marketing power is likely to enable it to capture the market and drive Pioneer out of business.

In response, Pioneer has filed a lawsuit against Raider for patent infringement. With attorney fees and other expenses, the cost of going to trial (win or lose) is expected to be $1 million. Pioneer feels that it has a 60% chance of winning the case, in which case it would receive $5 million in damages. If Pioneer loses the case, it gets nothing. Moreover, if Pioneer loses the case, there is a 50% chance that the judge would also order Pioneer to pay for court expenses and lawyer fees for Raider (an additional $1 million cost).

Raider has countered by offering Pioneer $1.5 million to settle this case out of court.
Using decision tree analysis, determine in the steps below what Pioneer Software Company should do.

NOTE: In parts 36 and 38 you MUST provide a copies of decision tree and of your Excel calculations, respectively, for problem E to be graded. You are also reminded to submit all of your computer files for this problem with your completed exam to the "Final Exam" link on Bb. Failure to provide any of these deliverables will result in this problem NOT being graded.

25. Draw the decision tree for this problem and annotate it with the expected monetary values where appropriate.

In a space created below this part, you must present HERE a copy of your fully-annotated decision tree.

26. a. In new lines entered below this part, state the decision that the Pioneer Software Company should make.
b. In new lines entered below this part, briefly state the criterion that was used to arrive at this decision.

27. In a space created below this part, you must present HERE a copy of your Excel calculations for problem E.

• AND submit all of your computer files for this problem with your completed exam to the "Final Exam" link on Bb. Include in the filename/tab name "Prob E."

Question 4.

XYX Manufacturing produces high-end aircraft parts. Their Landing Gear Shop has four machines to make precision airfoil parts: a metal lathe, a turning machine, a milling machine, and a radial drill. This shop has six machine machinists, most of them are certified to work on all the machines and have demonstrated that they perform better on some machines than on others. The Landing Gear has been tasked with a big job that requires all four machines. The times required by the machinists to perform the required work on each machine is given in the table below.

Machinist		Operating Time (minutes)
	Metal lathe	Turning machine	Milling machine	Radial drill
1	34	16	51	21
2	56	37	32	43
3	27	-	65	52
4	36	22	53	25
5	45	39	57	31
6	28	32	49	36

Note that Machinist 3 has not yet been certified on the turning machine. As a result, the shop manager will not assign this machinist to that machine.

The shop scheduler needs to schedule a machinist to each machine to produce parts in the least total time.

NOTE: In part 43 you MUST provide your Excel file or Lingo input and output files for problem F to receive credit for this problem. You are also reminded to submit all of your computer files for this problem with your completed exam to the "Final Exam" link on Bb. Failure to provide any of these deliverables will result in this problem NOT being scored.

28. In new lines entered below, formulate and state the full and complete mathematical representation of this situation; include specific definitions of all the model variables.

29. In lines entered below, (1) state the specific class of problem this is and (2) state the specific type of problem this is within that class. Include an explanation of why.

30. In new lines entered below, state the optimal assignment of a machinist to each machine.

31. In new lines entered below, state the combined time in minutes expected to produce a part using all four machines with the assigned operators.

32. In a space created below this part, you must present HERE a copy of your computer input and output screens for problem F.
AND submit all of your computer files for this problem with your completed exam