Week 2 Assignment
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Southwest University *
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307
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Industrial Engineering
Date
Dec 6, 2023
Type
docx
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Case Study: Uncertainty
Case Study: Uncertainty
The United States Army Aviation Systems is excited to produce a blade spar for a Heavy
Lift Helicopter program, and they have hired the Ventron Engineering Company to manufacture
the blade spars for the program. The helicopter blade is a metal tube that is the same length and
is anticipated to cost $2 million. The blade is also the same width.
The Ventron Engineering
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Case Study: Uncertainty
Company does not, however, possess the capacity or the equipment necessary to create the
metal tube in a single piece. In order for the Ventron Company to take on the project, they were
required to make a decision about whether or not they would increase the capacity of their
equipment for the sectioning and extrusion operations.
In order to continue with the process, the
manufacturer was required to create a decision tree and evaluate their available choices.
By
using the decision tree to examine the alternatives, Ventron will be able to increase its predicted
monetary worth, take into account the benefits of the side possibilities, and determine the
company's capacity to pay.
The Ventron Company is now operational and is exploring the possibility of
incorporating additional advantages, project income, and expenditures related to the
enhancement of the EMV.
In addition, the organization has conducted the essential risk
assessment in order to choose the optimal course of action. According to the findings of the
study, the sectioning process will take twelve months, will cost about $1.8 million, and will
simply need an expansion of the existing technology.
The process of extrusion takes place in two
stages.
Step one calls for spending 300 thousand dollars and having a ninetieth of a possibility of
succeeding in enhancing the materials that are necessary for the manufacturing procedure. Step
two calls for a modification procedure that will set you back 960 thousand dollars, and there is a
75 percent chance that it will be successful.
The project is inexpensive, and it comes with the
bonus of having positive unintended consequences.
The time needed for the project is one year
and eight months.
The Ventron Company is going to make use of the decision tree in order to determine the
maximum EMV, cost, and contract value, in addition to the chance of success. According to
Albright and Winston (2020), the decision tree assists in determining the best course of action by
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Case Study: Uncertainty
taking into account the likelihood of success and the monetary worth of each potential outcome.
In order to determine whether or not to improve the sectioning of the extrusion processor,
determining the ancillary advantages requires some trial and error.
Excel's anticipated value of
perfect information is a useful tool for determining value and assisting organizations in making
the most informed decision possible.
The extrusion method, which takes into account all of the company's limits, is the ideal
choice for Ventron Company. The procedure of extrusion would be the optimal option if one
were to maximize the potential financial worth of around 1.45 million dollars. The sum has been
decided upon via the decision tree that included many stages.
Each choice presents the reader
with detailed information on the income and expenditures associated with the two choices.
The
decision tree also provides information on the ancillary advantages. A monetary value of around
2 million dollars is anticipated to result from the extrusion process.
The extrusion method is
more likely to be used by the Ventron Company as a result of the EMV.
In addition to the EMV,
the Ventron Company will understand the importance of the ancillary advantages that are
presented in a distinct manner in each of the two possibilities.
The Ventron Company is able to
identify the EMV as well as the side advantages of nearly 2 million dollars.
Every additional
benefit that is more than $124,444.5 shows that there have been improvements made to the
extrusion process and that the product has high value.
It was suggested that the Ventron Company make use of the decision tree in order to
determine the projected EMVs according to cost, revenues, and side effects.
The decision tree
has been used by a great number of companies in order to determine which possibilities are most
suitable when taking into account the related limitations and success prospects.
The necessity of
accurately calculating the advantages of information is shown by the case study entitled
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Case Study: Uncertainty
"Developing a Helicopter Component for the Army." The EVPI algorithm need to be used by
the Ventron Company in order to recognize flawless information.
The Ventron Company is
obligated to settle on a plan for optimizing EMV and finish the project within the allotted time
frame of 18 months.
In order to properly evaluate the Developing a Helicopter Component for
the Army scenario, the decision tree is an absolute need.
Calculations that need to be done are
another vital component of the process of selecting the greatest alternative.
Additionally, it will
highlight any essential adjustments that need to be done by the organization in order to complete
the project.
These modifications need to be noted as well, suggesting the most effective next
step for the Ventron Engineering Company to take.
The suggestions that have been presented
above are based on my viewpoint, and additional discussion should take place depending on the
criteria that the firm has for the profitability and success of the project.
In the event that further
modifications are required as a result of clear rationale, other ideas may also be considered for
evaluation. For the purpose of the Developing a Helicopter Component for the Army instance,
the needed data for financials and analysis may be seen in a clear and concise manner by both the
management and the stakeholders.
There is a lot to learn from the example entitled "Developing a Helicopter Component for
the Army."
A monumental choice may be broken down into more manageable chunks, which in
turn can guide the organization toward choices that will improve its EMV.
The Ventron
Company was able to zero in on the choice that would provide the most lucrative outcomes
thanks to sound decision-making.
The Ventron Company would, in the context of a cost-benefit
analysis, take into account the value associated with enterprises operating in the material source
industry; this would result in benefits that would exceed the costs incurred.
The Ventron
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Case Study: Uncertainty
Company is able to determine the best course of action, given the range of possibilities and the
importance of the information at hand thanks to the development of a decision tree.
References
Albright, S. C., & Winston, W. L. (2020). Business analytics: Data analysis and decision making
(7th ed.). Cengage Learning.
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Case Study: Uncertainty
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