OPERATIONS MANAGEMENT CUSTOM ACCESS
11th Edition
ISBN: 9780135622438
Author: KRAJEWSKI
Publisher: PEARSON EDUCATION (COLLEGE)
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 4, Problem 21P
A manager is trying to decide whether to buy one machine or two. If only one machine is purchased and demand proves to be excessive, the second machine can be purchased later. Some sales would be lost, however, because the lead time for delivery of this type of machine is 6 months. In addition, the cost per machine will be lower if both machines are purchased at the same time. The probability of low demand is estimated to be 0.30 and that of high demand to be 0.70. The after tax
If one machine is purchased and demand is low, the NPV is $120,000. If demand is high, the manager has three options: (1) doing nothing, which has an NPV of $120,000; (2) subcontracting, with an NPV of $140,000; and (3) buying the second machine, with an NPV of $130,000.
- Draw a decision tree for this problem.
- What is the best decision and what is its expected payoff?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Business has moved quickly from bricks and mortar to clicks and bricks; broadcasting now includes interacting, and live streaming has become a universal service. You only need to use these ideas on your connected devices to explore them. One of the most significant challenges facing retailers today is orchestrating a seamless consumer experience across multiple channels, such as online, in-store, and hybrid models.
What are some challenges associated with e-business?
The advantage we get from business may outweigh the threats of hackers. How do you see this balance, and how do you solve this situation?
Part 1: Read the Ivey case: Amazon.com: Supply Chain Management, which isprovided in your Harvard course pack. Answer the following four questionsregarding Amazon.com. Use evidence from the case to support your answers to thequestions. (60 points – 15 points per question)1) How is Amazon’s supply chain different from that of traditional brick-and-mortar retailers?2) What are the key advantages to the structure of Amazon’s supplychain and the management of the company’s supply chain operations?3) What are the challenges Amazon faces, and what are the implicationsfor its supply chain?4) As Jeff Bezos, what steps would you take to improve Amazon’s supplychain? Why?Part 2: Answer each of the questions as indicated.1) Imagine that you are a consultant, and your client (a medical devicemanufacturer) has asked you to perform a risk assessment of theirsupply chain. List and explain three or more major activities that youwould undertake when performing this risk assessment. (15 points)2) Your…
Chapter 4 Solutions
OPERATIONS MANAGEMENT CUSTOM ACCESS
Ch. 4 - Prob. 1DQCh. 4 - Prob. 2DQCh. 4 - The Dahlia Medical Center has 30 labor rooms, 15...Ch. 4 - A process currently services an average of 50...Ch. 4 - An airline company must plan its fleet capacity...Ch. 4 - Food Goblin Supermarkets use both cashiers and...Ch. 4 - Returning to Problem 4, under both assumption of...Ch. 4 - Purple Swift manufactures birdhouses in lots of...Ch. 4 - Macon Controls produces three different types of...Ch. 4 - Up, Up, and Away is a producer of kites and wind...
Ch. 4 - Tuff-Rider, Inc. manufactures touring bikes and...Ch. 4 - Arabelle is considering expanding the floor area...Ch. 4 - The Astro World amusement park has the opportunity...Ch. 4 - Kim Epson operates a full-service car wash, which...Ch. 4 - MKM International is seeking to purchase a new CNC...Ch. 4 - Prob. 17PCh. 4 - Prob. 18PCh. 4 - Prob. 19PCh. 4 - Dawson Electronics is a manufacturer of high-tech...Ch. 4 - A manager is trying to decide whether to buy one...Ch. 4 - Acme Steel Fabricators experienced booming...Ch. 4 - Referring to Problem 7, the operations manager at...Ch. 4 - Darren Mack owns the Gas n’ Go convenience store...Ch. 4 - Prob. 25PCh. 4 - Prob. 1VCCh. 4 - Prob. 2VCCh. 4 - How does Southwest Airlines know they are...Ch. 4 - Prob. 4VCCh. 4 - Prob. 1CCh. 4 - Prob. 2CCh. 4 - Prob. 3C
Additional Business Textbook Solutions
Find more solutions based on key concepts
The Warm and Toasty Heating Oil Company used to deliver heating oil by sending trucks that printed out a ticket...
Essentials of MIS (13th Edition)
Real options and its types. Introduction: The net present value is the variation between present cash inflows v...
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
Opportunity cost of capital Which of the following statements are true? The opportunity cost of capital:
Equals...
PRIN.OF CORPORATE FINANCE
The flowchart for the process at the local car wash. Introduction: Flowchart: A flowchart is a visualrepresenta...
Principles of Operations Management: Sustainability and Supply Chain Management (10th Edition)
Assume you are a CFO of a company that is attempting to race additional capital to finance an expansion of its ...
Financial Accounting, Student Value Edition (5th Edition)
1-1. Define marketing and outline the steps in the marketing process. (AASCB: Communication)
Marketing: An Introduction (13th Edition)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Similar questions
- The project management team of Solar Systems has developed a network consisting of the following list of activities in installing its solar panels. Times are given in weeks. Activity Most Preceding Optimistic( a) likely(m) Pessimistic(b) A 5 11 14 B 3 3 9 C - 6 10 14 D A, B 3 5 7 E B 4 6 11 F C 6 8 13 G D, E 2 4 6 H F 3. 3 9 Required: A. Draw the activity network for this problem (either AON or AOA). B. Determine the Expected Time and Variance for each activity. C. D. Show the activity schedule (ES, EF, LS, and LF) as well as slack (in table) Determine and state the critical path for this project. This must be based on your work in and not by inspection. (ii). What are the expected time and the variance of the project? What is the probability the project will be finished within 25 weeks?arrow_forward2x+y-3z=9 x-3y+6z=5 3x+2y+z=20 Solve the following system of simultaneous equation using the Cramer's rulearrow_forwardThe frequency of breakdown of a machine that issues lottery tickets is given in the following table. Repairs cost an average of $240. A service firm is willing to provide preventive maintenance under either of two options: #1 is $500 and covers all necessary repairs, and #2 is $350 and covers any repairs after the first one. Which option would have the lowest expected cost: pay for all repairs, service option #1, or service option #2? Number of Breakdowns/Month 0 1 2 3 4 Frequency of Occurrence .10 .30 .30 .20 .10arrow_forward
- 1. William Beville's computer training school, in Richmond, stocks workbooks with the following characteristics: Demand D = 19,500 units / year Ordering cost S = $25 / order Holding Cost H = $4 / unit / year a) Calculate the EOQ for the workbooks b) What are the annual holding costs for the workbooks? c) What are the annual ordering costs? 2. What is the purpose of the ABC classification system? 3. What is "safety stock"? What does safety stock provide safety against? Explain your answer Replyarrow_forwardSammy's Soldier, manufactures paints. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through Department A and Department B. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Data for Department A for February 2017 are: Work in process, beginning inventory, 30% converted.............. 200 units Units started during February............................................................... 800 units Work in process, ending inventory..................................................... 240 units Costs for Department A for February 2017 are: Work in process, beginning inventory: Direct materials.................................................. $150,000 Conversion costs............................................................................................................................. $210,000 Direct materials costs added during…arrow_forwardConsider the following data collected for Albo's Rentals: Direct Materials Direct Manufacturing Labor Cost incurred Actual inputs x Actual prices $210,000 $95,000 Actual inputs x standard prices 214,000 88,000 Standard inputs allowed for actual output x standard prices 220,000 85,000 Required: Compute the price and efficiency variances for direct materials: Question 17Answer a. Price $4000 F; Efficiency $10000 U b. Price $5000 F; Efficiency $5000 F c. Price $4000 F; Efficiency $6000 F d. Price $10000 U; Efficiency $4000 Farrow_forward
- Already got wrong Chatgpt answer Plz don't use chat gptarrow_forwardMany artists and art lovers embrace the idea of the “starving artist,” such as the early career artist who hasn’t yet sold much of her art or whose art hasn’t yet been “discovered,” the artist who sacrifices lifestyle, living in a cheap apartment in a poor neighborhood, scraping by with barely enough to eat, pouring every dollar at their disposal into his art, or the artist who makes do by working other jobs, such as a waiter or waitress, to pay the rent so he can work on his art in his free time. As an artist and businessperson, however, you’d rather not be a “starving artist.” Of course, it takes time to master your art, display your work, and build a following, but is it necessary if you’re successful as an artist to also be a bad businessperson. The challenge with your art, bronze sculptures, however, is what comes first, the chicken or the egg, in other words, success as an artist or financial success. With the cost of materials, foundry time to pour and shape your creations,…arrow_forwardCan you guys help me with this? Thank you! Here is the article's title by Murray Stassen about the current event: Clemens Trautmann promoted to President of Deutsche Grammophon and New Business Strategy This assignment requires the use of the concepts and theories learned to analyze a current event in the business world. It needs to be relevant to strategic management and has the quality of analysis of the situation from the article. From this situation, which of these concepts and theories could be applied to? * Five Generic Competitive Strategies: + Broad Low-Cost Strategy + Broad Differentiation Strategy + Focused Low-Cost Strategy + Focused Differentiation Strategy + Best-Cost Strategy * Ethical Universalism * Ethical Relativism * Corporate Social Responsibilityarrow_forward
- Identify the causes of the problem. -Start by Reviewing the Inputs box in the Organizing Framework to help you identify the causes of the problem in this case. First identify the person factors and then situation factors as inputs. -Then move to the Processes box in the Organizing Framework and review the potential causes among individual level, team level and organizational level factors. -For each cause explain why this is a cause of the problem. For each cause ask yourself “why” is this a cause to the problem we identified. Remember that asking why multiple times will help you find the root cause of the problem.arrow_forward6. Develop a POQ solution and calculate total relevant costs for the data in the following table. Period 1 2 3 4 5 6 7 8 9 10 11 12 Gross requirements 30 40 30 70 20 10 80 50 Holding cost =$2.50/unit/week Holding cost =$2.50/unit/week; setup cost =$150setup cost =$15 0; lead time =1 week lead time =1 week; beginning inventory =40beginning inventory =40.arrow_forward5. Develop a lot-for-lot solution and calculate total relevant costs for the data in the following table. Period 1 2 3 4 5 6 7 8 9 10 11 12 Gross requirements 30 40 30 70 20 10 80 50 Holding cost =$2.50/unit/week Holding cost =$2.50/unit/week; setup cost =$150setup cost =$15 0; lead time =1 week lead time =1 week; beginning inventory =40beginning inventory =40.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,
Operations ManagementOperations ManagementISBN:9781259667473Author:William J StevensonPublisher:McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi...Operations ManagementISBN:9781259666100Author:F. Robert Jacobs, Richard B ChasePublisher:McGraw-Hill Education
Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning
Production and Operations Analysis, Seventh Editi...Operations ManagementISBN:9781478623069Author:Steven Nahmias, Tava Lennon OlsenPublisher:Waveland Press, Inc.
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,
Operations Management
Operations Management
ISBN:9781259667473
Author:William J Stevenson
Publisher:McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi...
Operations Management
ISBN:9781259666100
Author:F. Robert Jacobs, Richard B Chase
Publisher:McGraw-Hill Education
Purchasing and Supply Chain Management
Operations Management
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Cengage Learning
Production and Operations Analysis, Seventh Editi...
Operations Management
ISBN:9781478623069
Author:Steven Nahmias, Tava Lennon Olsen
Publisher:Waveland Press, Inc.
Inventory Management | Concepts, Examples and Solved Problems; Author: Dr. Bharatendra Rai;https://www.youtube.com/watch?v=2n9NLZTIlz8;License: Standard YouTube License, CC-BY