Operations Management: Sustainability and Supply Chain Management (12th Edition)
12th Edition
ISBN: 9780134130422
Author: Jay Heizer, Barry Render, Chuck Munson
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
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.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
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 2a) Expected value for the option = $ b)Expected value for the build new plant option = c) The alternative that provides Weiss the…
Sun TV sells TV sets. It does not sell smart TVs so customers do not come to Sun TV if they want to purchase
smart TVs. Sun TV wants to start selling smart TVs and will only sell smart TVs to customers to whom they
advertise. Managers use customer information (income level, previous purchase history) to decide which
customers they should target. The team needs to decide how sure it must be in predicting customer interest in
a smart TV. If it is too cautious, it will choose a very high cutoff probability and only market to customers who
it believes are very likely to be in the market for a smart TV. This may cause them to miss out on many customers.
If they are too aggressive and choose a low cutoff probability, they may identify more individuals interested in
buying smart TVs but also end up wasting marketing dollars on customers who are not interested in purchasing
smart TVs. To choose a cutoff probability, the team develops the confusion matrices below for two cutoff
probabilities on…
A5
Chapter A Solutions
Operations Management: Sustainability and Supply Chain Management (12th Edition)
Ch. A - Prob. 1DQCh. A - Prob. 2DQCh. A - Prob. 3DQCh. A - Prob. 4DQCh. A - Prob. 5DQCh. A - Question: 6. Explain how decision trees might be...Ch. A - Prob. 7DQCh. A - Prob. 8DQCh. A - Question 9. Identify the five steps in analyzing a...Ch. A - Prob. 10DQ
Ch. A - Question 11. The expected value criterion is...Ch. A - Question 12. When are decision trees most useful?Ch. A - Given the following conditional value table,...Ch. A - Prob. 2PCh. A - Prob. 3PCh. A - Jeffrey Helm owns a health and fitness center...Ch. A - Prob. 5PCh. A - Prob. 6PCh. A - Prob. 7PCh. A - Prob. 8PCh. A - Prob. 9PCh. A - Prob. 10PCh. A - The University of Miami bookstore stocks textbooks...Ch. A - Palmer Jam Company is a small manufacturer of...Ch. A - Prob. 13PCh. A - Prob. 14PCh. A - Prob. 21PCh. A - Prob. 22PCh. A - Prob. 23PCh. A - Prob. 24PCh. A - Prob. 25PCh. A - Prob. 26PCh. A - Philip Musa can build either a large video rental...Ch. A - Prob. 28PCh. A - Prob. 29PCh. A - Question A.24 On the opening page of Module A and...Ch. A - Question Warehouse Tenting at the Port of Miami...Ch. A - Question Warehouse Tenting at the Port of Miami...Ch. A - Question Warehouse Tenting at the Port of Miami...
Knowledge Booster
Similar questions
- The water pump company has succeeded in introducing a water pump that saves electricity, is easy to install, and is durable (guaranteed). Its high quality has given the company an early edge in the local and national markets, but the entry of highly skilled competitors may occur within the next 3 years. Assume that the income and expense relationship of the company is as follows: TR = 22000Q - 15.6Q2 MR = dTR / dQ = 22000 - 31.2Q TC = 300000 + 4640Q + 10Q2 MC = dTC / dQ = 4640 + 20Q Where TR is income (in thousands of rupiah), Q is quantity (in units), MR is marginal income (in thousands of rupiah), TC is total cost, including a risk-adjusted normal rate of return on investment (in thousands of rupiah), and MC is the marginal cost (in thousands of rupiah). a. Compute: the profit-maximizing price-output combination. b. Compute: long-run equilibrium high-price / low-output. c. Compute: long-run low-price / high-output equilibriumarrow_forwardA manager is going to purchase new processing equipment and must decide on the number ofspare parts to order with the new equipment. The spares cost $200 each, and any unused spareswill have an expected salvage value of $50 each. The probability of usage can be described by thisdistribution:Number 0 1 2 3Probability .10 .50 .25 .15If a part fails and a spare is not available, two days will be needed to obtain a replacementand install it. The cost for idle equipment is $500 per day. What quantity of spares should beordered?a. Use the ratio method.b. Use the tabular method (see Table 13.3).arrow_forward11.3. A commuter airline overbooks all of its flights by one passenger (i.e., the ticket agent will take seven reservations for an airplane that has only six seats). The no-show experience for the past 20 days is shown below: No-shows Frequency 0 6 1 5 2 4 3 3 4 2 Using the critical fractile P(darrow_forwardAn entrepreneur has embarked on a project to use human hair in place of animal furs in a clothing line. The human hair is to be woven into cotton fabrics, to make a hybrid fabric, that can be used as a thermal insulating fabric (i.e., it keeps persons warm). To increase the probability of sales the hybrid fabric must be dyed in various colors. Provide advice to the entrepreneur on what approaches should/could be taken to dye the new hybrid fabric. In your advice discuss the requirements of the dyes to be used, why hair dyes would not be a good option and how the dye(s) you suggest would work in the application based on the structure/properties of the fabric.arrow_forwardDeborah Kellogg buys Breathalyzer test sets for the Denver 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 technology dayton enterprise 1% 0.65 0.25 3% 0.25 0.25 5% 0.10 0.50 For example the probability of getting a batch of tests that are 1% defective from Winter park technology is 0.65. Because Kellogg orders 10,000 tests per order, this would mean there is a 0.65 probability of getting 100 defective tests out of the 10,000 tests if Winter park technology is used to fill the order. A defectice breathalyzer test can be repaired for $0.50. Although the quality of the…arrow_forward1. A clothing store is opening a second location and wants to decide whether to open in San Francisco or New York. Opening a location in either city will involve different capital expenditures and demonstrate different rates of success. Below are the relevant data: DECISION PROBABILITY OF PROBABILITY OF SUCCESS FAILURE San Francisco 40% 60% New York 30% 70% PAYOFF (SUCCESS) 15,000,000 30,000,000 PAYOFF (FAILURE) 4,000,000 10,000,000 DECISION San Francisco New York The costs associated with opening each location are as follows: in San Francisco, the store will need to invest $2 million, while a New York location will require an investment of $5 million. The expected payoff amounts represent the potential revenue if the store succeeds, or the potential loss if the store fails. REQUIRED: a. Draw the decision tree for the above problem; b. Compute for the Expected Value for each decision; c. Compute for the net gain / loss of each decisionarrow_forwardHoward Weiss, Inc., is considering building a sensitve new radiation scanning device. His managers belivee that there is a probabililty of 0.45 that the ATR Co. will come out with a competitive product. If weiss adds as assembly line for the prodcut and ATR Co. does not follow with a competitive product, Weiss's expected profit is $60,000; if Weiss adds an assembly line and ATR follows suit, Weiss still expects $15,000 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. a) Expected value for the Add assembly line option=$39750 b) Expected value for the Build new plant option=$________ The alternative that provides Weiss the greatest expected monetary value is _________ The value of the return under this decision is _________ c) The expected value of perfect information EVPI for Weiss=$________arrow_forwardBill Holliday isn't sure what he should do. He can build a four-apartment building, a two-apartment building, gather additional information, or simply do nothing. If he gathers additional information, the results could be favorable or unfavorable, but it would cost him $3,000 to gather it. Bill thinks there is a 50-50 chance that the information will be favorable. If the rental market is favorable, Bill will earn $15,000 with four apartments or $5,000 with two. He does not have the financial resources to pursue both options, but with an unfavorable rental market he would lose $20,000 with four apartments or $10,000 with two. Without gathering additional information, Bill estimates the probability of a favorable rental market to be 0.7. A favorable survey report would increase the probability of a favorable rental market to 0.9. Moreover, an unfavorable report of the additional information would decrease the probability of a favorable income market to 0.4. Of course, Bill can forget…arrow_forwardRubatex Corporation manufactures rubber and foam for a variety of products, including artificial turf housing and insulation, hockey helmet liners, scuba diving suits, sports sandals and mouse pads. The company was purchased by an investment firm called American industrial partners (AIP) that has so far earned only a 1 percent return on its investment. Obviously the company is having problems. Its sales are up but earnings are down. In the first three months after acquisition, the company lost $2 million on $68 million in sales. Understandably, AIP wants to know why and is demanding aggressive action. Employees at the Bedford, Virginia, plant say they know something’s wrong. The plant is hot and dirty and crumbling, and they are working harder to produce items of poorer quality. Fewer than 7 of 10 orders are shipped on time, and 2% of sales are returned as defective. Built in 1924, the plant sprawls over 14 buildings, with only the offices and lunchroom air-conditioned. Equipment is…arrow_forwardCome 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.arrow_forwardb. If management has been offered the option of a temporary lease while the town planning board considers the motel's application, would you advise management to sign the lease? The lease will cost $40,000. X Answer is not complete. because the cost than EVPI Yes less is ofarrow_forward3. An organization decides to assess the impact of its suppliers' failure to meet delivery dates, as well as late payment of their bills on time. by customers or other debtors. This analysis seeks to assess a type of risk: Select one: a.Unpredictable. b.Inherent. c.prevailing. d.Intangible.arrow_forwardarrow_back_iosSEE MORE QUESTIONSarrow_forward_ios
Recommended textbooks for you
Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,
Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,
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