Operations Management: Sustainability and Supply Chain Management (12th Edition)
Operations Management: Sustainability and Supply Chain Management (12th Edition)
12th Edition
ISBN: 9780134130422
Author: Jay Heizer, Barry Render, Chuck Munson
Publisher: PEARSON
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Chapter A, Problem 5P

a.

Summary Introduction

To determine: The EMV for each alternatives.

Introduction:

EMV:Expected monetary value (EMV) is expected value or payout that has different possible state of nature, each with their associated possibilities.

b.

Summary Introduction

To determine: The expected value of perfect information.

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Howard Weiss, Inc., is considering building a sensitive new radiation scanning device. His managers believe that there is a probability of 0.6 that the ATR Co. will come out with a competitive product. If Weiss adds an assembly line for the product and ATR Co. does not follow with a competitive product, Weiss's expected profit is $40,000; if Weiss adds an assembly line and ATR follows suit, Weiss still expects $10,000 profit. If Weiss adds a new plant addition and ATR does not produce a competitive product, Weiss expects a profit of $600,000; if ATR does compete for this market, Weiss expects a loss of $100,000. What is the best decision based on expected monetary value (EMV)? What are the EMV and the expected value of perfect information (EVPI)? The best decision is to select the new plant with the EMV of $320,000 and the EVPI is $364,000. The best decision is to select the assembly line with the EMV of $180,000 and the EVPI is $66,000. The best decision is to select the assembly line…
Howard​ Weiss, Inc., is considering building a sensitive new radiation scanning device.  His managers believe that there is aprobability of .35  that the ATR Co. will come out with a competitive product.  If Weiss adds an assembly line for the product and ATR Co. does not follow with a competitive​ product, Weiss's expected profit is $40,000 ​; if Weiss adds an assembly line and ATR follows​ suit, Weiss still expects $20,000 profit.  If Weiss adds a new plant addition and ATR does not produce a competitive​ product, Weiss expects a profit of $600,000 ​; if ATR does compete for this​ market, Weiss expects a loss of $120,000.Part 2​a) Expected value for the  option​ = ​$                                                                                                                           b)Expected value for the build new plant option =                                                                                                       c) The alternative that provides Weiss the…
the EMV is....
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