Define decision base on an expected monetary value criterion, Operation Management

Assignment Help:

Page Engineering designs and constructs air conditioning and heating (HVAC) systems for hospitals and clinics. Currently the company's staff is overloaded with design work. There is a major design project due in 8 weeks. The penalty for completing the design late is $14,000 per week, since any delay will cause the facility to open later than anticipated, and cost the client significant revenue. If the company uses its inside engineers to complete the design, it will have to pay them overtime for all work. Page has estimated that it will cost $12,000 per week (wages and overhead), including late weeks, to have company engineers complete the design. Page is also considering having an outside engineering firm do the design. A bid of $92,000 has been received for the completed design. Yet another option for completing the design is to conduct a joint design by having a third engineering company complete all electromechanical components of the design at a cost of $56,600. Page would then complete the rest of the design and control systems at an estimated cost of $30,000.

Page has estimated the following probabilities of completing the project within various time frames when using each of the three options. Those estimates are shown in the following table:

Probability of Completing the Design

Option On-Time 1 wk. late 2 wks. Late 3 wks. Late

Internal Eng. 0.4 0.5 0.1 -------

External Eng. 0.2 0.4 0.3 0.1

Joint Design 0.1 0.3 0.4 0.2

What is the best decision based on an expected monetary value criterion?


Related Discussions:- Define decision base on an expected monetary value criterion

Define uninformed aspiring international business executive, "U.S Managemen...

"U.S Management theories contain a number of idiosyncrasies not necessarily shared by management elsewhere"...and then proceeds to mention three specific examples. Why might these

Operation management case study assignment, Problem- 1) Many Institution...

Problem- 1) Many Institutional Models: There are a variety of organizational forms that are assumed by the Manipal hospitals for carrying on their work. The Manipal hospitals ca

Explain the decision-making view, Describe the decision-making view and the...

Describe the decision-making view and the process view of operations management. Why are both views useful in studying the field of operations management?

Explain the firm terminates steven, Last month, Steven Smith was hired as t...

Last month, Steven Smith was hired as the secretary for lawyer Wayne Wright, who has a drinking problem. Wayne's last secretary quit when Wayne tried to get her to go out with him

Define what can companies and organizations do to facilitate, What can comp...

What can companies and organizations do to facilitate diversity?

Present a crisis management consulting report, Scenario You have been ...

Scenario You have been recently appointed as a crisis manager for a large shared centre located in New York. The main reason for you to be present as a manager is a very high

Define how each it project supports bill''s umuc pizza, Explain how each IT...

Explain how each IT project listed above specifically improves and/or supports Bill's UMUC Pizza business

Explain types of organizational culture, Choose two specific features of or...

Choose two specific features of organizational structure described in chapters 5, 6, 8, and/or 9 and discuss how these specific features might lead to specific types of organizatio

What mechanisms are available for conflict resolution, Question 1: (a) ...

Question 1: (a) "Alone of all non-western countries Japan has become a modern society, because her reforms based the new "Westernised" behaviour on traditional Japanese values

Explain strategy of wal-mart in china, Assess the strategy of Wal-Mart in C...

Assess the strategy of Wal-Mart in China where the company has recognized unions in all 62 stores, to its strategy in the U.S., which is to combat any type of union representation.

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