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

Periodicals and serials - classification of documents, Periodicals and Seri...

Periodicals and Serials: Periodical publications form an important part of today's information world. It is one of the oft chosen forms of research communication. There are ov

Graphic methods - correlation regression analysis, Graphic Methods a. ...

Graphic Methods a. Scatter Diagram: Scatter  diagram  is a special  type of dot chart.  Under  this methods  the given data are  plotted in  a graph  paper  in the form of  d

Microforms and photographs - classification of documents, Photographs and I...

Photographs and Illustrations: Photographs and illustrations are documents which provide a visual or pictorial representation of a person, place or situation which words fail

Stratified sample size - sampling size, Stratified Sample Size The  sa...

Stratified Sample Size The  sampling  study  has depended  much on the stratified sample  to reduce  the sampling  error, samples  size may have a number of strata or  cluster

process technolgy, 1 strategic implication of product and process decision...

1 strategic implication of product and process decisions 2 process planning and design 3 work measurement

Presentation - report writing presentation , Presentation After  the c...

Presentation After  the completion of any  research  project the concept  techniques  and results  of the  research  projects  should  be presented to the  audience of interes

Why the dual formulation?, Dual formulation is done for a number of r...

Dual formulation is done for a number of reasons. The solution to a Dual problem provides all essential information about the solution to the Primal problem. A so

Linear programming, mile-high microbrewery makes a light beer and a dark be...

mile-high microbrewery makes a light beer and a dark beer. mile-high has a limited supply of barley, limited bottling capacity, and a limited market for light beer. profits are $0.

Phases of an or project, give me an example of pre-modelling, modelling and...

give me an example of pre-modelling, modelling and post modelling phases

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