Explain best decision based on an expected monetary value, Operation Management

Assignment Help:

The product design group of Flores Electrick Supplies, Inc., has determined that it needs to design a new series of switches. It must decide on one of three design strategies. The market forecasts is for 200,000 units. the better and more sophisticated the design strategy and the more time spent on value engineering, the less will be the variable cost. The chief of engineering design, has decided tht the following costs are a good estimate of the initial and variable costs connected with each of the 3 strategies:

a) Low Tech: A low-tech, low cost process consisiting of hiring several new junior engineers. This option has a fixed cost of $45,000 and variable-cost probabilities of .3 for $.55 each, .4 for $.50 and .3 for $.45

b) Subcontract: A medium-cost approach using a good outside design staff. This approach would have a fixed cost of $65,000 and variable-cost probabilities of .7 of $.45, .2 of $.40, and .1 of $.35.

c) High Tech: A high tech approach using the very best of the inside staff and the latest computer aided design technology. Fixed cost of $75,000 and variable cost probabilities of .9 of $.40 and .1 of $.35.

What is the best decision based on an expected monetary value (EMV) criterion? (We want the lowest EMV as we are dealing with cost in this problem).


Related Discussions:- Explain best decision based on an expected monetary value

Qualities of a good marketing audit, Which control should periodically reas...

Which control should periodically reassess its approach to the marketplace with a good marketing audit? • Ethical control • Strategic control • Performance control • Ma

Structural adjustment - factor affecting productivity, Structural Adjustmen...

Structural Adjustments - Factors Affecting Productivity Improvement Structural adjustment relates to the composition of society, the industries in which people work, fashions

Explain how many people would you expect to be waiting, Suzy, a bartender, ...

Suzy, a bartender, can serve drinks at the average rate of one every 35 sec. During a hot evening recently, the bar was particularly busy and every 45 sec someone was at the bar as

Explain current trends in the health care industry, How might a universal h...

How might a universal health insurance program change the current trends in the health care industry? In your opinion, are programs like that offered by Aetna to have surgery condu

A trial balance discloses how many types of errors, A Trial Balance disclos...

A Trial Balance discloses how many types of errors? A Trial Balance discloses errors that are given below:   i)    An item posted double.   ii)   A mistake into posting.

Explain actionable claim for discrimination under ada, 1. If Rosa hires Cal...

1. If Rosa hires Caleb and after working for two months, Caleb requests additional time off to take care of his ailing wife and Rosa denies his request: A. Caleb has an actionab

Explain increase retention of employees, If you became the new manager at r...

If you became the new manager at restaurant with high employee turnover, what actions would you take to increase retention of employees?

Describe what will be the duration of management conference, What will be t...

What will be the duration of a management conference duration?

Explain what does just in time manufacturing mean, What does Just in Time M...

What does Just in Time Manufacturing mean and how does it relate to manufacturing operations?

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