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

Steps of research process, Steps of Research Process The steps of resear...

Steps of Research Process The steps of research process have already been discussed in theory. Here we shall outline the procedure of conducting the research. i) Formulate t

Rank sum test the mann whitney u - test, RANK SUM TEST THE  MANN WHITNEY U...

RANK SUM TEST THE  MANN WHITNEY U - TEST Mann  Whitney u test is an alternative to the  samples  test. This  test is based  on the ranks  of the  observation of two samples pu

Students t distribution - hypothesis testing, Normal 0 false ...

Normal 0 false false false EN-IN X-NONE X-NONE

Operating system, represent a diagrammatic way of components of the os

represent a diagrammatic way of components of the os

Phase of operation research, The scientific method in O R study generall...

The scientific method in O R study generally involves the followings three phases: 1. Judgment phase, 2. Research phase 3. Action phase

Multi stage sampling - sampling decisions, Normal 0 false fal...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Transportation, we have three reservoirs with daily supplies of15, 20 and 2...

we have three reservoirs with daily supplies of15, 20 and 25 litres of fresh water respectively. on each day we must supply four cities A B C D whose demands are 8 10 12 and 15 res

I need answer for the below question, A paper mill produces two grades of p...

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

Set of pareto optimal policies, Problem: A policy maker is considering seve...

Problem: A policy maker is considering several policy options that lead to different utility levels of different individuals a) Which Policy is would be optimal according t

Optimization , A company uses 4 pounds of resource 1 to make each unit of X...

A company uses 4 pounds of resource 1 to make each unit of X1 and 3 pounds of resource 1 to make each unit of X2. There are only 150 pounds of resource 1 available. Which of the fo

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