Reference no: EM132833497

BUS 306 Quantitative Business Analysis - Emirates College of Technology

Question 1: Problem solving
A handicraft products trader is selling leather cases for $40 the unit. To run his business, he needs to pay $1200 for rent, $500 salaries, and another $300 for renewing his business license. The handicraft trader has the choice to import his products from three different countries, and it will cost him $20 per unit if he importsthe product from China, $25 per unit if he imports the product from India, and $15 per unit if he imports the product from Indonesia.

Questions:

1. Compute the trader's profit if he sells 80 units imported from China and 60 units imported from India.
2. If the trader imports only from China, then compute the trader's profitsfrom importing and selling50 units then from importing and selling 150 units. Explain the obtained results.
3. What is the trader total cost from importing 100 units from Indonesia and 200 units from India ?
4. If the trader decides to import only from China, how many units he should import and sell to reach a profit of $3000?
5. If the trader wants to reach a positive profit by selling only 90, 110, then200 units, from which country (or countries) he should import his products for each of the three number of units.
6. The trader decides to import only from India. If the trader has the privilege to return the unsold units to India and obtain a refund of $20 per unit returned, then compute his profit from importing 250 units but selling only 200 units.

Question 2: Problem solving

Kenneth Brown is the principal owner of Brown Oil, Inc. At the present time, Kenneth is forced to consider purchasing some more equipmentfor Brown Oil to increase the quality and productivity and to face the increasing competition. He can choose to purchase from five types of new machines. His alternatives are shown in the following decision table:

	Outcomes
Alternative Decisions (Machine type)	O1: Favorable Market	O2: Moderate Market	O3: Unfavorable Market
Sub 100	$ 300000	$ 150000	$ -200000
Sub 200	$ 350000	$ 200000	$ 200000
Oil J	$ 250000	$ 100000	$ -100000
Texan	$ 75000	$ 50000	$ 0
Texan 100	$ 72000	$ 70000	$ 5000
Probabilities	0.2	0.5	0.3

For example, if Kenneth purchases a Sub 100 and if there is a favorable market, he will realize a profit of $300,000. On the other hand, if the market is unfavorable, Kenneth will suffer a loss of $200,000.

Kenneth has always been a very pessimistic decision maker. In case Kenneth has no information of the market condition probabilities.

Questions:

1. What type of decision environment is Kenneth facing?
2. What decision criterion should he use?
3. What alternative is best?

If information about the probability of each outcome becomes available to Kenneth then:

Questions:

4. Find the best decision using the adequate technique.
5. How much Kenneth should pay to know the perfect information about the market condition?
6. Is it reasonable for Kenneth to purchase the perfect information about the market outcomes for $20,000? Explain why.

Attachment:- Quantitative Business Analysis.rar