1. (A12) Palmer Jam Company is a small manufacturer of several different jam products. One product is an organic jam that has no preservatives, sold to retail outlets. Susan Palmer must decide how many cases of jam to manufacture each month. The probability that demand will be 6 cases is .1, for 7 cases it is .3, for 8 cases it is .5, and for 9 cases it is .1. The cost of every case is $45, and the price Susan gets for each case is $95. Unfortunately, any case not sold by the end of the month are of no value as a result of spoilage. How many cases should Susan manufacture each month? (Show your work. You can use MS Excel or MS Word to help) 2. (A8) Leah Johnson, director of Urgent Care of Brookline, wants to increase capacity to provide low-cost flu shots but must decide whether to do so by hiring another full-time nurse or by using part-time nurses. The table on page 705 shows the expected costs of the two options for three possible demand levels. answer part a and part b. A. Using expected value, what should Ms. Johnson do? B. Draw an appropriate decision tree showing the payoffs and probabilities. 3. Explain how decision trees might be used in several of the 10 OM decisions.
1. (A12) Palmer Jam Company is a small manufacturer of several different jam products. One product is an organic jam that has no preservatives, sold to retail outlets. Susan Palmer must decide how many cases of jam to manufacture each month. The probability that demand will be 6 cases is .1, for 7 cases it is .3, for 8 cases it is .5, and for 9 cases it is .1. The cost of every case is $45, and the price Susan gets for each case is $95. Unfortunately, any case not sold by the end of the month are of no value as a result of spoilage. How many cases should Susan manufacture each month? (Show your work. You can use MS Excel or MS Word to help)
2. (A8) Leah Johnson, director of Urgent Care of Brookline, wants to increase capacity to provide low-cost flu shots but must decide whether to do so by hiring another full-time nurse or by using part-time nurses. The table on page 705 shows the expected costs of the two options for three possible demand levels. answer part a and part b. A. Using expected value, what should Ms. Johnson do? B. Draw an appropriate decision tree showing the payoffs and probabilities.
3. Explain how decision trees might be used in several of the 10 OM decisions.
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