Principles of Operations Management: Sustainability and Supply Chain Management (10th Edition)
10th Edition
ISBN: 9780134181981
Author: Jay Heizer, Barry Render, Chuck Munson
Publisher: PEARSON
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Chapter 5, Problem 22P
Summary Introduction
To select: The best decision based on Expected Monetary Value (EMV) criterion at company MD.
Introduction: The Expected Monetary Value (EMV) is a system for calculating the expected returns for certain decisions made by a company.
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MacDonald Products, Inc., of Clarkson, New York, has the option of
(a) proceeding immediately with production of a new top-of-the-line stereo TV that has just completed prototype testing or
(b) having the value analysis team complete a study.
If Ed Lusk, VP for operations, proceeds with the existing prototype (option a), the firm can expect sales to be 100,000 units at $550 each, with a probability of 0.60 and a 0.40 probability of 75,000 at $550. If, however, he uses the value analysis
team (option b), the firm expects sales of 75,000 units at $750, with a probability of 0.70 and a 0.30 probability of 70,000 units at $750. Value engineering, at a cost of $100,000, is only used in option b. Which option has the highest expected
monetary value (EMV)?
The EMV for option a is $
and the EMV for option b is $
Therefore, option
has the highest expected monetary value. (Enter your responses as integers.)
a
uestlon Help
MacDonald Products, Inc., of Clarkson, New York, has the option of
(a) proceeding immediately with production of a new top-of-the-line stereo TV that has just completed prototype testing or
(b) having the value analysis team complete a study.
If Ed Lusk, VP for operations, proceeds with the existing prototype (option a), the firm can expect sales to be 120,000 units at
$580 each, with a probability of 0.41 and a 0.59 probability of 65,000 at $580. If, however, he uses the value analysis team (option
b), the firm expects sales of 85,000 units at $730, with a probability of 0.71 and a 0.29 probability of 65,000 units at $730. Value
engineering, at a cost of $90,000, is only used in option b. Which option has the highest expected monetary value (EMV)?
The EMV for option a is $
and the EMV for option b is $
Therefore, option b
has the highest expected monetary value.
(Enter your responses as integers.)
Please do not give solution in image format thanku
Chapter 5 Solutions
Principles of Operations Management: Sustainability and Supply Chain Management (10th Edition)
Ch. 5.S - Prob. 1DQCh. 5.S - Prob. 2DQCh. 5.S - Prob. 3DQCh. 5.S - Discuss the 3 Rs.Ch. 5.S - Prob. 5DQCh. 5.S - Prob. 6DQCh. 5.S - Prob. 7DQCh. 5.S - Prob. 1PCh. 5.S - Prob. 2PCh. 5.S - Prob. 3P
Ch. 5.S - Prob. 4PCh. 5.S - Prob. 5PCh. 5.S - Prob. 6PCh. 5.S - Prob. 7PCh. 5.S - Prob. 8PCh. 5.S - Prob. 9PCh. 5.S - Prob. 10PCh. 5.S - A Southern Georgia school district is considering...Ch. 5.S - Prob. 12PCh. 5.S - Prob. 13PCh. 5.S - Prob. 14PCh. 5.S - Prob. 15PCh. 5.S - Prob. 16PCh. 5.S - Prob. 17PCh. 5.S - Prob. 18PCh. 5.S - Prob. 19PCh. 5.S - Prob. 1.1VCCh. 5.S - Prob. 1.2VCCh. 5.S - Prob. 1.3VCCh. 5.S - Prob. 2.1VCCh. 5.S - Prob. 2.2VCCh. 5.S - Prob. 2.3VCCh. 5 - Prob. 1EDCh. 5 - Prob. 1DQCh. 5 - What techniques do we use to define a product? ...Ch. 5 - Prob. 3DQCh. 5 - Prob. 4DQCh. 5 - Prob. 5DQCh. 5 - Prob. 6DQCh. 5 - Describe four organizational approaches to product...Ch. 5 - Explain what is meant by robust design.Ch. 5 - Prob. 9DQCh. 5 - What information is contained in a bill of...Ch. 5 - What information is contained in an engineering...Ch. 5 - What information is contained in an assembly...Ch. 5 - Prob. 13DQCh. 5 - Explain how the house of quality translates...Ch. 5 - Prob. 15DQCh. 5 - Prob. 16DQCh. 5 - Why are the direct interaction and surrogate...Ch. 5 - Prob. 18DQCh. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - Construct a house of quality matrix for a...Ch. 5 - Prob. 5PCh. 5 - Prob. 6PCh. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Prepare a bill of material for (a) a pair of...Ch. 5 - Prob. 10PCh. 5 - Prepare a script for telephone callers at the...Ch. 5 - Prob. 12PCh. 5 - Prob. 18PCh. 5 - Review strategic process positioning options for...Ch. 5 - Select a service business that involves...Ch. 5 - Prob. 21PCh. 5 - Prob. 22PCh. 5 - Residents of Mill River have fond memories of ice...Ch. 5 - Prob. 24PCh. 5 - Prob. 25PCh. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 1CSCh. 5 - Prob. 2CSCh. 5 - Prob. 3CSCh. 5 - Prob. 1VCCh. 5 - Prob. 2VCCh. 5 - Prob. 3VCCh. 5 - Prob. 4VC
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