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

Sources of stress and job burnout, QUESTION Discuss the major sources o...

QUESTION Discuss the major sources of stress and job burnout and outline the strategies for managing stress. QUESTION How can you use the „Johari Window Model? as a

Sample survey methods:, Sample Survey Methods: If proposed investigati...

Sample Survey Methods: If proposed investigation is done  only on  a part taken  out of  universe then it  will be  known  as sample  survey. This  part of the universe is kno

What is critical defect, Question 1 What is intrinsic quality? Explain key...

Question 1 What is intrinsic quality? Explain key dimensions of a quality product or service Question 2 Explain any five sources of standards Question 3 What is Critical

MB0048, A PAPER MILL PRODUCES TWO GRADES OF PAPER VIZ., X AND Y. BECAUSE OF...

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

Categorizing operations research problems, what are the categorization of o...

what are the categorization of operations research problems?

Report writing - report writing presentation, REPORT WRITING The final...

REPORT WRITING The final step in research is to report the study  findings to those  who authorized the investigation. The American marketing association is  of the opinion  t

Linear programmimg, #questionA paper mill produces two grades of paper viz....

#questionA 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 grad

HOMEWORK, A company uses 4 pounds of resource 1 to make each unit of X1 and...

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

Operation research, Discuss the methodology of operation research

Discuss the methodology of operation research

Techniques of observation method, Techniques of Observation Method Obs...

Techniques of Observation Method Observation always involves some interaction between respondent and researcher in which researcher has an opportunity to watch respondent fu

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