Considering the possibility of building an additional factor

Assignment Help Operation Management
Reference no: EM13899641

Expando, Inc., is considering the possibility of building an additional factory that would produce a new addition to their product line. The company is currently considering two options. The first is a small facility that it could build at a cost of $6 million. If demand for new products is low, the company expects to receive $10 million in discounted revenues (present value of future revenues) with the small facility. On the other hand, if demand is high, it expects $12 million in discounted revenues using the small facility. The second option is to build a large factory at a cost of $9 million. Were demand to be low, the company would expect $10 million in discounted revenues with the large plant. If demand is high, the company estimates that the discounted revenues would be $14 million. In either case, the probability of demand being high is .40, and the probability of it being low is .60. Not constructing a new factory would result in no additional revenue being generated because the current factories cannot produce these new products. Construct a decision tree to help Expando make the best decision.

Reference no: EM13899641

Questions Cloud

Unions have increased the use of a strike as their BATNA : If a company has more than one warehouse in northern Florida and only the Jacksonville site is unionized, the company’s BATNA and bargaining power is greater than if only one warehouse exists. Since the 1980s, unions have increased the use of a strik..
What types of retirement and estate planning activities : What types of retirement and estate planning activities might you start to consider at this point of your life? Do you need professional advice to begin or complete the process?
Financial position for the loan application : Suppose that you are putting together a loan application to purchase a home. Based on your income and assets, you qualify for a mortgage loan, but just barely. How would you address each of the following situations in reporting your financial positio..
What is decision based on expected monetary value criterion : The product design group of Iyengar Electric Supplies, Inc., has determined that is needs to design a new series of switches. It must decide on one of three design strategies. The market forecast is for 200,000 units. What is the best decision based ..
Considering the possibility of building an additional factor : Expando, Inc., is considering the possibility of building an additional factory that would produce a new addition to their product line. The company is currently considering two options. The first is a small facility that it could build at a cost of ..
Why is it important to develop a personal vision : What is vision, and why is it important to develop a personal vision? How can developing a personal vision enable a leader to develop and motivate people forward in the organization? Which organizations have leaders who take their personal vision and..
Identify the five most important key performance indicators : Identify the five most important Key Performance Indicators (KPIs) to measure the effectiveness of the strategic staffing plan to hire the new Operations Director for Capital One.
In a distributive strategy : In a distributive strategy, usually each side will include more items on its opening list than it really cares about in order to have something it can give away.
Which allows firm to achieve economies of scale : What are the factors which allows firm to achieve economies of scale? What are the two ways through which firm can add capacity by using external capacity? What is meant by capacity flexibility and what are three ways by which firm can have flexible ..

Reviews

Write a Review

Operation Management Questions & Answers

  Analysis of the behaviors of supply chain networks

Provide an analysis of the behaviors of supply chain networks and supply chain drivers. Explain how supply chain impacts distribution of assets and resources.

  Selling consumer products versus business products

However, the challenges Blu Dot encounters have not diminished with its success. Blu Dot still struggles with keeping affordability at the lower end of the spectrum and craftsmanship at the high end. What are the different challenges for Blu Dot in s..

  Explain the typical work relationship between the project

1 describe the typical work relationship between a project manager and a contract manager. 2 you are writing a

  Which option should the company pursue

There is negligble fixed cost if the item is purchased, a numerically controlled machine costs $124,000, and a machining center costs $217,000.

  Forecasting function with the highest noise dampening

If we forecast $100,000 sales for July, we actually sold $200,000 in July, and we want an exponential smoothing forecasting function with the highest noise dampening among @=0.1, @=0.3, @=0.5; if you can, forecast August sales. If you cannot, stat..

  Choose a global non-us auto company

Instruction: this is not an essay, therefore answer them as it is (1, 2, 3, 4) No more than 4 page 1. Choose a global non- US auto company. What environmental laws are in place in this company's country of origin?

  Donate the receipts to the organization

In reliance on the anticipated receipts, Kids Care contracts for the construction of a residence for homeless teens. After the concert, Gerard tells Kids Care that he has decided not to donate the receipts to the organization.

  Recognize and describe the governments rational for

identify and discuss the governments rational for regulating businesses. do you agree or disagree with it? why or why

  How risk management process reduce organizational risk

Define risk management, the components of a risk management program, and how the risk management process can reduce organizational risk.

  Relative advantage-compatibility-complexity-trialability

Write about a recent innovation in your area, region, or place of work in terms of the following: Relative Advantage, Compatibility, Complexity, Trialability, and Observability.

  Should conway continue to operate his business

Should Conway continue to operate his business as a sole proprietorship? Should he operate his business as a partnership? Explain why or why not.

  Weighed simple random sample of porter-house steaks

Weights of Steaks A student of the author weighed a simple random sample of Porter-house steaks, and the results (in ounces) are listed below. The steaks are supposed to be 21 oz because they are listed on the menu as weighing 20 ounces, and they los..

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