Maximus Steel plans to introduce one of three new products code-named: Wren, Hawk, and Nightingale. The marketing department indicated that the success of any product depends on the market conditions (Favorable, Neutral, or Unfavorable). The profit the company will earn also depends on the market conditions. The table below shows the probability estimated for each market condition and the profits Maximus Steel will realize within those conditions: Product Code Market Conditions Favorable P = 0.2 Neutral P = 0.7 Unfavorable P = 0.1 Wren $120,000 $70,000 ($30,000) Hawk $60,000 $40,000 $20,000 Nightingale $35,000 $30,000 $30,000 Maximus Steel is considering hiring a market research firm to do a survey to determine future market conditions. The results of the survey will indicate either positive or negative market conditions. There is a 0.60 probability of a positive report, given favorable conditions; a 0.30 probability of a positive report, given neutral conditions; and a .10 probability of a positive report, given unfavorable conditions. There is a .90 probability of a negative report, given unfavorable conditions; a .70 probability, given neutral conditions; and a .40 probability, given favorable conditions. 1) Develop the complete decision tree for Maximus Steel. 2) Recommend the best strategy for the company. Indicate the expected value of the strategy, and the maximum amount the company should pay the market research firm for the survey results.
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
Maximus Steel plans to introduce one of three new products code-named: Wren, Hawk, and Nightingale. The marketing department indicated that the success of any product depends on the market conditions (Favorable, Neutral, or Unfavorable). The profit the company will earn also depends on the market conditions.
The table below shows the probability estimated for each market condition and the profits Maximus Steel will realize within those conditions:
|
Product Code |
Market Conditions |
||
|
Favorable P = 0.2 |
Neutral P = 0.7 |
Unfavorable P = 0.1 |
|
|
Wren |
$120,000 |
$70,000 |
($30,000) |
|
Hawk |
$60,000 |
$40,000 |
$20,000 |
|
Nightingale |
$35,000 |
$30,000 |
$30,000 |
Maximus Steel is considering hiring a
There is a 0.60 probability of a positive report, given favorable conditions; a 0.30 probability of a positive report, given neutral conditions; and a .10 probability of a positive report, given unfavorable conditions.
There is a .90 probability of a negative report, given unfavorable conditions; a .70 probability, given neutral conditions; and a .40 probability, given favorable conditions.
1) Develop the complete decision tree for Maximus Steel.
2) Recommend the best strategy for the company. Indicate the expected value of the strategy, and the maximum amount the company should pay the market research firm for the survey results.
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