Draw a decision tree showing the decisions and chance events

Assignment Help Operation Management
Reference no: EM1381250

Spectrum Hair Salon is considering expanding its business, as it is experiencing a large growth. The question is whether it should expand with a bigger facility than needed, hoping that demand will catch up, or with a small facility, knowing that it will need to reconsider expanding in three years. The management at Spectrum has estimated the following chances for demand:

•the likelihood of demand being high is 0.70;

•the likelihood of demand being low is 0.30.

Estimated profits for each alternative are as follows:

•large expansion has an estimated profitability of either $100,000 or $70,000, depending on whether demand turns out to be high or low;

•small expansion has a profitability of $50,000, assuming that demand is low;

•small expansion with an occurrence of high demand would require considering whether to expand further. If the business expands at this point, the profitability is expected to be $90,000. If it does not expand further, the profitability is expected to be $60,000.

Draw a decision tree showing the decisions, chance events, and their probabilities, as well as the profitability of outcomes, and solve the decision tree

EVsmall expansion = $, EVlarge expansion = $

Reference no: EM1381250

Questions Cloud

They gave the example that if it orginally ran : They gave the example that if it orginally ran 2 minutes long it would then run for only 1 min and 12 seconds. I thought 40% would be 1 min 20 sec
Discuss the competitive forces model in relation to amazon : Discuss the competitive forces model in relation to Amazon and its business strategies. Discuss profitabilty in relation to Amazon's business stratgey and model
Identify how changes in the external environment : Identify how changes in the external environment may affect the OM strategy for a company. For example, what impact are the following factors likely to have on OM strategy
Determine the expected number of nonconforming units : Determine the expected number of nonconforming units that will result from a production run of 20,000 units. Assume that all previously stated conditions regarding the process remain as described during the production run of 20,000
Draw a decision tree showing the decisions and chance events : Draw a decision tree showing the decisions, chance events, and their probabilities, as well as the profitability of outcomes, and solve the decision tree EVsmall expansion = $, EVlarge expansion = $
A firm is planning to conduct a study on the quality : A firm is planning to conduct a study on the quality dimensions of its products and wants to determine the sample size required to estimate the process mean with a sampling error of at most 0.1 at a 90 percentage confidence level.
Determine the expected number of nonconforming units : Determine the expected number of nonconforming units that will result from a production run of 20,000 units. Assume that all previously stated conditions regarding the process remain as described during the production run of 20,000
There are two vendors who can supply you with empty cans : There are two vendors who can supply you with empty cans used in your pickle business. One says he'll replace any cans you find defective free of charge.
The daughter of the owner of a local hamburger restaurant : The daughter of the owner of a local hamburger restaurant is preparing to open a new fast-food restaurant called Hasty Burgers. Based on the arrival rates at her father's outlets, she expects customers to arrive at the drive-up window according to..

Reviews

Write a Review

Operation Management Questions & Answers

  Book review - the goal

Operations Management is about a book review. Title of the book is "Goal". This book has been written by Dr. Eliyahu Goldartt. The book has been appreciated by many as one of those books which offers an insight into the operations and strategic capac..

  Operational plan in hospitality enterprise

Operational plan pertaining to a hospitality enterprise is given in detail in the solution. The operational plan is an important plan or preparation which gives guidelines regarding the role and responsibilities of each and every operation at all lev..

  Managing operations and information

Recognise the importance of a strategic approach to the development and deployment of organisational information systems. Demonstrate an understanding of the importance of databases and their integration to the organisation's overall information mana..

  A make-or-buy analysis

An analysis of the holding costs, including the appropriate annual holding cost rate.

  Evolution and contributor of operations management

Briefly explain Evolution and contributor of Operations management.

  Functions and responsibilities of an operations manager

A number of drivers of change have transformed the roles, functions and responsibilities of an operations manager over recent years. These drivers have not only been based on technological innovations but also on the need for organisations to develop..

  Compute the optimal order quantity

Compute the Optimal Order quantity of DVD players. Determine the appropriate reorder point.

  Relationship to operations practice in the organisation

Evaluate problems in operations and identify approaches to overcoming them. Critically evaluate operating plans and identify areas for improvement. Justify, implement and evaluate changes to operations in line with modern approaches.

  A make or buy analysis

Develop a report for Figi Fabricating that will address the question of whether the company should continue to purchase the part from the supplier or begin to produce the part itself.

  Prepare a staffing plan

Prepare a staffing plan showing the change of your unit from medical/surgical staffing to oncology staffing.

  Leadership styles in different organizations

Ccompare the effectiveness of different leadership styles in different organizations

  Risk management tools and models

Be able to understand the concept of risk, roles and responsibilities for risk management and risk management tools and models.

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