Table Q5 Machines/Probabilities Low (0.10) 50 Moderate (0.60) 60 High (0.30) 85 Alternatives A в 60 60 60 40 50 90 a) Explain what decision would be appropriate using each of the following criteria such as Maximin, Maximax, Minimax regret, and Laplace. b) Discuss the acceptable alternatives by using a decision tree and an EPVI value.
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- Typed solution The product design group of Iyengar Electric Supplies, Inc., has determined that it needs to design a new series of switches. It must decide on one of three design strategies. The market forecast is for 200,000 units. The better and more sophisticated the design strategy and the more time spent on value engineering, the less will be the variable cost. The chief of engineering design, Dr. W. L. Berry, has decided that the following costs are a good estimate of the initial and variable costs connected with each of the three strategies explained below. Low-tech: a low-technology, low-cost process consisting of hiring several new junior engineers. This option has a fixed cost of $40,000 and variable-cost probabilities of 0.5 for $0.56, 0.1 for $0.47,and 0.4 for $0.41. Subcontract: a medium-cost approach using a good outside design staff. This approach would have a fixed cost of $75,000 and variable-cost probabilities of 0.7 of $0.49, 0.2 of $0.46, and…McBurger, Inc., wants to redesign its kitchens to improve productivity and quality. Three designs, called designs K1, K2, and K3, are under consideration. No matter which design is used, daily production of sandwiches at a typical McBurger restaurant is for 500 sandwiches. A sandwich costs $1.30 to produce. Non-defective sandwiches sell, on the average, for $2.50 per sandwich. Defective sandwiches cannot be sold and are scrapped. The goal is to choose a design that maximizes the expected profit at a typical restaurant over a 300-day period. Designs K1, K2, and K3 cost $80,000, $100,000, and $140,000, respectively. Under design K1, there is a .80 chance that 90 out of each 100 sandwiches are non-defective and a .20 chance that 70 out of each 100 sandwiches are non-defective. Under design K2, there is a .85 chance that 90 out of each 100 sandwiches are non-defective and a .15 chance that 75 out of each 100 sandwiches are non-defective. Under design K3, there is a .90 chance that 95 out…McBurger, Inc., wants to redesign its kitchens to improve productivity and quality. Three designs, called designs K1, K2, and K3, are under consideration. No matter which design is used, daily production of sandwiches at a typical McBurger restaurant is for 600 sandwiches. A sandwich costs $1.30 to produce. Non-defective sandwiches sell, on the average, for $2.50 per sandwich. Defective sandwiches cannot be sold and are scrapped. The goal is to choose a design that maximizes the expected profit at a typical restaurant over a 300-day period. Designs K1, K2, and K3 cost $115,000, $140,000, and $170,000, respectively. Under design K1, there is a .80 chance that 90 out of each 100 sandwiches are non-defective and a .20 chance that 70 out of each 100 sandwiches are non-defective. Under design K2, there is a .85 chance that 90 out of each 100 sandwiches are non-defective and a .15 chance that 75 out of each 100 sandwiches are non-defective. Under design K3, there is a…
- Prepare an REA diagram for a Fitness Center using the following assumptions. We only offer individual memberships. Each membership costs a client $50 per month. On the first of each month, our Accounts Payable clerk sends to each client a monthly bill for $50. The client is expected to pay the bill within 10 days or the membership will be cancelled. When the check comes in, our Cash Receipts clerk deposits it into our sole bank account. (Hint: Do we need a Resource connected to the Sale event? Do we need a Resource connected to the Cash Receipt event?)How does quality planning differ depending on the criteria for functionality, system output, performance, dependability, and maintainability?Gator Beach Marts, a chain of convenience grocery stores in the Fort Lauderdale area, has store hours that fluctuate from month to month as the tourist trade in the community varies. The utility costs for one of the company’s stores are listed below for the past six months. Required:1. Use the high-low method to estimate the cost behavior for the store’s utility costs. Express the cost behavior in formula form (Y = a + bX). What is the variable utility cost per hour of operation?2. Draw a scatter diagram of the store’s utility costs. Visually fit a cost line to the plotted data. Estimate the variable utility cost per hour of operation.3. Build a spreadsheet: Construct an Excel spreadsheet and use the Excel commands to perform a least-squares regression. Estimate the cost behavior for the store’s utility cost. Express the cost behavior in formula form. What is the variable utility cost per hour of operation?4. During July, the store will be open 300 hours. Predict the store’s total…
- DBS is also expecting the demand for its top-of-the range devices to increase further from the next year. Given the increase in annual requirement, the production manager is contemplating to start manufacturing the special components in-house to save costs rather than sourcing them from outside. Given the current purchase price of $9000 per unit, what will the average annual requirement need to be in order to justify making the components in-house if the variable cost of making is $6750 per unit and an upfront fixed cost of $55,000,000 is needed to procure the necessary plant and equipment? However, in the event that the expected increase in demand does not materialize and the demand is actually forecast to drop to 20,000 units next year, then what will be the maximum price per unit that DBS would be willing to pay to the supplier in order to continue buying from them? Going forward, if it is found to be a better decision to make the components in-house, DBS will then need to…2) - AMT, Inc., is considering the purchase of a digital camera for maintenance of design specifications by feeding digital pictures directly into an engineering workstation where computer-aided design files can be superimposed over the digital pictures. Differences between the two images can be noted, and corrections, as appropriate, can then be made by design engineers. a) You have been asked by management to determine the PW of the EVA of this equipment, assuming the following estimates: capital investment = $345,000; market value at end of year six = $120,000; annual revenues = $120,000; annual expenses = $8,000; equipment life = 6 years; effective income tax rate = 50%; and after-tax MARR = 9% per year. MACRS depreciation will be used with a five-year recovery period. b) Compute the PW of the equipment's ATCFS. Is your answer in Part (a) the same as your answer in Part (b)?Construct ER diagram for the following scenario. There is an online community to sharejokes. The community consists of an admin and a number of members. There are two types of members:regular/ad hoc members and contributors. A contributor actively writes jokes, while regular membersread jokes posted. A regular member can write a comment on a joke he/she read. The contributors canmake use of these comments for improvements. The contributors are registered and issued passwordsby the admin. They have to login to post jokes. The admin also manages the jokes posted, mainly toremove the old jokes when the space runs short.
- Ritz Products's materials manager, Tej Dhakar, must determine whether to make or buy a new semiconductor for the wrist TV that the firm is about to produce. Four million units are expected to be produced over the life cycle. If the product is made, start-up and production costs of the make decision total $1 million, with a probability of 0.5 that the product will be satisfactory and a 0.5 probability that it will not. If the product is not satisfactory, the firm will have to reevaluate the decision. If the decision is reevaluated, the choice will be whether to spend another $1 million to redesign the semiconductor or to purchase. Likelihood of success the second time that the make decision is made is 0.8. If the second make decision also fails, the firm must purchase. Regardless of when the purchase takes place, Dhakar's best judgment cost is that Ritz will pay $0.50 for each purchased semiconductor plus $2 million in vendor development cost. a) Assuming that Ritz must have the…Ritz Products's materials manager, Tej Dhakar, must determine whether to make or buy a new semiconductor for the wrist TV that the firm is about to produce. Three million units are expected to be produced over the life cycle. If the product is made, start-up and production costs of the make decision total $2 million, with a probability of 0.5 that the product will be satisfactory and a 0.5 probability that it will not. If the product is not satisfactory, the firm will have to reevaluate the decision. If the decision is reevaluated, the choice will be whether to spend another $2 million to redesign the semiconductor or to purchase. Likelihood of success the second time that the make decision is made is 0.8. If the second make decision also fails, the firm must purchase. Regardless of when the purchase takes place, Dhakar's best judgment of cost is that Ritz will pay $0.60 for each purchased semiconductor plus $2 million in vendor development cost. a) Assuming that Ritz must have the…Ritz Products's materials manager, Tej Dhakar, must determine whether to make or buy a new semiconductor for the wrist TV that the firm is about to produce. One million units are expected to be produced over the life cycle. If the product is made, start-up and production costs of the make decision total $3 million, with a probability of 0.4 that the product will be satisfactory and a 0.6 probability that it will not. If the product is not satisfactory, the firm will have to reevaluate the decision. If the decision is reevaluated, the choice will be whether to spend another $3 million to redesign the semiconductor or to purchase. Likelihood of success the second time that the make decision is made is 0.8. If the second make decision also fails, the firm must purchase. Regardless of when the purchase takes place, Dhakar's best judgment of cost is that Ritz will pay $0.40 for each purchased semiconductor plus $2 million in vendor development cost. Part 2 a) Assuming that…