Decision tree approach, Operation Research

Assignment Help:

Question:

Spencerville Products is expanding its operations west of the Mississippi.  Its first step is to build a manufacturing facility in Denver to satisfy demand on the West Coast.  Spencerville has an option to build either a large facility that has an annual output of 500,000 units per year or a smaller facility with an output of 250,000 units per year.  It must build one of these two facilities - it does not have any other options.

The expected demand for the company's products is shown as either high or moderate in the table below:

Demand Level                        Annual Demand (units/year)                       Probability

High                                        450,000                                                    0.4

Moderate                                 150,000                                                    0.6

The small facility has a profit of $5.00 per unit.  The large facility has a profit of $4.00/unit.

a) What size facility should Spencerville Products build based on expected values and using a decision tree approach?  You must also provide the decision tree using the appropriate decision tree symbols.

b)  Suppose that the company is not certain about the 450,000 projection for the High Demand scenario.  It could be higher than this projection.  How sensitive is the selection in a) to the High Demand projection.  In other words, at what annual demand for the High Demand scenario would the company be indifferent between the two size facilities?

 


Related Discussions:- Decision tree approach

Solve lpp by using its duality, Maximize w = 5x -2y +3z subject to 2x +2y -...

Maximize w = 5x -2y +3z subject to 2x +2y -z>=2 y + 3z

Decide upon the objective , Decide upon  the Objective  What is it...

Decide upon  the Objective  What is it that you  aim to  achieve  the end  of the  presentation ? your  objective  should  be crystal  clear. Do  not stray or move  a ways

Problem, A paper mill produces two grades of paper viz., X and Y. Because o...

A paper mill produces two grades of paper viz., X and Y. Because of raw material restrictions, it cannot produce more than 400 tons of grade X paper and 300 tons of

Markov analysis, The town of Silverton, Colorado, has three gasoline statio...

The town of Silverton, Colorado, has three gasoline stations, Shell, Exxon, and Arco. Customer selection of service stations can be modeled as a Markov process, with the following

LPP, A paper mill produces two grades of paper viz., X and Y. Because of ra...

A paper mill produces two grades of paper viz., X and Y. Because of raw material restrictions, it cannot produce more than 400 tons of grade X paper and 300 tons of grade Y paper i

Do it - report writing presentation , Do it  Everything  about  the...

Do it  Everything  about  the presentation is  ready and so  are you. The only  things  left if to face the audience in a confident and positive  manner and leave a mark on

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