decision theory, Operation Management, History

Assignment Help:
Write question herA firm must decide whether to construct a small, medium, or large stamping plant. A consultant’s report indicates a .20 probability that demand will be low and an .80 probability that demand will be high.


If the firm builds a small facility and demand turns out to be low, the net present value will be $41 million. If demand turns out to be high, the firm can either subcontract and realize the net present value of $41 million or expand greatly for a net present value of $46 million.


The firm could build a medium-size facility as a hedge: If demand turns out to be low, its net present value is estimated at $17 million; if demand turns out to be high, the firm could do nothing and realize a net present value of $46 million, or it could expand and realize a net present value of $58 million.


If the firm builds a large facility and demand is low, the net present value will be -$16 million, whereas high demand will result in a net present value of $76 million.


b. What is the maximin alternative? (Enter your answers in millions rounded to nearest whole number. Negative amount should be indicated by a minus sign. Omit the "$" sign in your response.)



Build a large facility $ million.
Build a small facility $ million.

--------------------------------------------------------------------------------


c. Compute the EVPI. (Enter your answers in millions of dollars rounded to 2 decimal places. Omit the "$" sign in your response.)



EVPI $ million.

--------------------------------------------------------------------------------


d. Perform sensitivity analysis on P (high). (Round "x" answer to 2 decimal places. Negative amount should be indicated by a minus sign.)


I Small + x
II Medium + x
III Large + x

--------------------------------------------------------------------------------


e

Related Discussions:- decision theory, Operation Management

How can america produce clean coal, 1.how can America be independent from o...

1.how can America be independent from other countries just on clean coal? 2.How can America produce clean coal? 3. Where would we get the money to produce clean coal? 4.wh

Explain the militia responsibility for colonials, Describe the militia resp...

Describe the militia responsibility for colonials during the mid 1700's. What were some of the pros and cons of this militia system? What are some examples of where this system was

Show the impeachment of andrew johnson, Discuss the impeachment of Andrew J...

Discuss the impeachment of Andrew Johnson and its implications IN DETAIL.

Explain at least three aspects of wu wei, Identify and explain at least thr...

Identify and explain at least three aspects of wu wei (non-doing) that would be practical in the busy lives of city dwellers, especially those living in the West. Provide a rationa

How did it exhibit the characteristics of a tragedy, Genre - This play is a...

Genre - This play is a classical Greek tragedy. How did it exhibit the characteristics of a tragedy?

Religions in persia and greece, I have two charts one on Religions in Persi...

I have two charts one on Religions in Persia and Greece. The other on Greek History. Please help

Tutors, who is king henry

who is king henry

Might civil war have been avoided, I want you to consider the possibility t...

I want you to consider the possibility that the Civil War might have been avoided. In this hypothetical situation.

Describe the most significant plant, please explain because i have been rea...

please explain because i have been reading and do not see the significant difference Describe the most significant plant, animal, and bacterial aspects of the Columbian Exchange -

Responsible for defeating themselves in revolutionary war, what evidence su...

what evidence supports the "British were responsible for defeating themselves in the revolutionary war"

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