2. A toy manufacturer has three different mechanisms that can be installed in a doll that it sells. The different mechanisms have three different setup costs (overheads) and variable costs and, therefore, the profit from the dolls is dependent on the volume of sales. The anticipated payoffs are as follows. Moderate Demand Heavy Demand 0.3 S170,000 $400,000 S800,000 Light Demand Probability Wind-up action Pneumatic action Electrical action 0.25 0.45 $325,000 $300,000 -$400,000 $190,000 $420,000 $240,000 a. What is the EMV of each decision alternative? b. Which action should be selected? c. What is the expected value with perfect information? d. What is the expected value of perfect information? e. What is the expected opportunity loss?

2. A toy manufacturer has three different mechanisms that can be installed in a doll that it sells. The different mechanisms have three different setup costs (overheads) and variable costs and, therefore, the profit from the dolls is dependent on the volume of sales. The anticipated payoffs are as follows. Moderate Demand Heavy Demand 0.3 S170,000 $400,000 S800,000 Light Demand Probability Wind-up action Pneumatic action Electrical action 0.25 0.45 $325,000 $300,000 -$400,000 $190,000 $420,000 $240,000 a. What is the EMV of each decision alternative? b. Which action should be selected? c. What is the expected value with perfect information? d. What is the expected value of perfect information? e. What is the expected opportunity loss?

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

See similar textbooks

Similar questions

Manufacturers producing highly customized products would most likely use a(n): a. backflush costing system b. hybrid costing system c. process costing system d. job-costing system
3. A company has a linear total cost function and has determined that over the next three months it can produce 1,000 units at a total cost of $300,000. This same manufacturer can produce 2,000 units at a total cost of $400,000. The units sell for $180 each. Find (i) fixted cost (ii) marginal cost, (iii) the break-even point and (iv) construct the break-even chart.
Come up with a decision using each of the different criteria under conditions of uncertainty using the table below. The payoff values are expressed as LOSSES.
Cannibalization Analysis The "Bare Bone" model has a list price of $2.99. UVC is $1.50 and projected sales for the year is 2,000,000. "Bill" retails for $3.99 with a UVC of $1.79 and has a sales forecast of 500,000. Projected first year sales of "Bodacious Bill" is 1,000,000 units. Fixed costs to enable insertion of audio sound effects for "Bodacious Bill" will be $2M for the first year. The "Bodacious Bill" will have a 50% markup on the breakeven price. Unit cost (breakeven price) = unit variable cost + (fixed cost/# of products produced). List (markup) price = unit cost * (1+ desired % markup on the retail price). Unit variable cost, including technical parts, add up to $4.99 What would be the list price on Bodacious Bill to break even? 50% of first year sales would be incremental. Of the remaining volume, 80% will be cannibalized from "Bill" sales and 20% would be offset with "Bare Bone" volume.
Select ONE of the following questions 1. Name and describe two of the four costs of inimitability.i need more explanation.
NOTES Find the UCL and LCL .1000 +3 3 1000 (1-1000) 100
The product is GRACE; bakebean
Discuss the make-or-buy decision in terms of cost,flexible response, speed and quality.
Choose one of the following products and describe how itmay (or already has) become vulnerable to substitution. Thendescribe an overall strategy, with two or three tactics, forreducing this vulnerability.a. printed copies of periodicals or booksb. TVsc. greeting cardsd. travel agencies
Incoterms being incoterms 2020 Contracts of carriage being the types of bill of lading
please answer within 30 minutes with detailed explanation as to why the option is right and why other options are wrong. make sure the answer is well explained and is in details else i will give negative ratings.
Deborah Kellogg buys Breathalyzer test sets for the Winter Park Police Department. The quality of the test sets from her two suppliers is indicated in the following table: Percent Defective Probability for Winter Park Probability for Dayton 1% 3% 5% .70 .20 .10 .30 .30 .40 Kellogg orders 10,000 tests per order. A defective Breathalyzer test set can be repaired for $0.50. When determining the costs for each branch (Decision Tree), utilize the number per order (*) the percent defective (*) the repair cost. a. What is the EMV for Winter Park? $ [Select ] b. What is the EMV for Dayton? $$127 c. What choice should Deborah Kellogg make? [Select] >