Explain expected monetary value criterion, Operation Management

Assignment Help:

The product design group of Flores Electric 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 forecast 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, Dr. W. L. Berry, has decided that the following costs are a good estimate of the initial and variable costs connected with each of the three strategies:

a. Low-tech: A low-technology, low cost process consisting 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 a variable-cost probabilities of .7 of $.45, .2 of $.40, and .1 of $.35.

c. High-tech: A high-technology approach using the very best of the inside staff and the latest computer-aided design technology. This approach has a fixed coast of $75,000 and a variable-cost probabilities of .9 of $.40 and .1 of $.35.

What is the best decision based on an expected monetary value criterion? (note:we want the lowest EMV, since dealing with costs.)


Related Discussions:- Explain expected monetary value criterion

Describe installing and servicing personal computer business, You work for ...

You work for a computer parts and software distributor. Your co-worker and friend is starting up a second business installing and servicing personal computers. She asks you not to

Find average time agent work for a call center, A call center employs 1,000...

A call center employs 1,000 agents. Every month 50 employees leave the company and 50 new employees are hired. How long does the average agent work for this call center?

Explain the four-step framework, Describe the four-step framework for one-t...

Describe the four-step framework for one-to-one marketing that can be adapted to CRM marketing?

Tqm, benefit from total quality management in operations management

benefit from total quality management in operations management

Bloomsday Outfitters produces T-shirts for road races. They , 1.How many st...

1.How many stamping machines are required? 2.what would be the quantities that would need amendment as far as Distribution Manager is concerned to service for week two and onwards?

What are some instances that would explain strategic groups, What are some ...

What are some examples that would explain strategic groups?

Corporate strategies- operation strategy, Corporate Strategies- Operation S...

Corporate Strategies- Operation Strategy Often it is not obvious to participants that an organisation has a corporate strategy. Consider this illustration. A visitor to a Poly

Explain function of operational leadership, Create a scenario that depicts ...

Create a scenario that depicts how the first line leader should act to fulfil the purpose and function of operational leadership in his or her area

Explain quality metrics, A variety of organizational culture characteristic...

A variety of organizational culture characteristics make project success more likely. The characteristics include: A. Sufficient funding B. Feasible schedule C. Respect 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