Exam 16: Decision Making

Use the following to answer the beekeeping questions below. A math major turned hipster-beekeeper has determined that his profit is governed by the equation 5x - 40,where x represents the number of hives he sets up for the honey season. -In the hipster-beekeeper's equation,40 represents the:

Use the following to answer the questions below. A company is considering two suppliers for the purchase of a part needed for manufacturing.Particulars are as follows: -Refer to the instruction above.For an annual volume of 3,000 units,which supplier should be chosen?

A marketing director must decide among four alternatives for a new marketing campaign.She ascertains that the probability of high demand is 0.8 and the probability of low demand is 0.2.What is the best choice with the payoffs shown in the tree?

A company is screening ideas for new services.Five alternative service ideas are being considered.Management identified four criteria and weighted them as follows: A = 30,B = 10,C = 20,and D = 40.They have also come up with scored values for the five alternatives and the four criteria as shown below.Management has decided that if an alternative has less than a total scored value of 600,it should automatically be rejected.Use the preference matrix technique to determine which idea should be accepted.

The decision rule in decision making under uncertainty that would be best for the manager who has high expectations would be:

The preference matrix technique can be used only with quantitative factors to consider.

A "Little Sis" restaurant has been opened as a prototype to test the concept of a smaller facility with a limited menu.Experience during the first two years was as follows: The average sale is $10 per customer.Use the following partially completed graph to determine the break-even quantity graphically.Then refine your solution by solving it algebraically.(Show your work for credit. )

A manufacturing firm is considering whether to produce or outsource the production of a new product.If they produce the item themselves,they will incur a fixed cost of $950,000 per year,but if they outsource overseas there will be a $1.5 million cost per year.The advantage of outsourcing overseas is the variable cost of 95¢ per unit,which is a fraction of their $43/unit cost in their own union shop.Regardless of where these devices are made,they will sell for $98 each.What is the break-even quantity for each alternative? Solve this problem graphically and algebraically.

Table A.2 Use the following to answer the questions below. A company that is introducing a new product has to choose between four different manufacturing methods,referred to as methods A,B,C and D.Depending on the demand for the product,they forecast different levels of expenses for the year (values are in thousands).The company has identified three possible states of nature for economic growth,and named them High,Medium,and Low. -Using the information in Table A.2,which alternative is BEST in accordance with an optimistic outlook?

Zipco is in serious negotiations to purchase a chunking machine that will enable them to perform their own chunking at $1 per unit.They currently have their chunking outsourced at a cost of $1.50 per unit and a fixed cost of $45,000.Their marketing team feels that they can sustain an annual volume of 10,000 units.What is the maximum fixed cost that Zipco should be willing to bear in order to perform their own chunking?

Table A.3 Use the following to answer the questions below. In choosing between three new jobs,Joe MBA considers the potential payoffs over the next three years.The following table contains the payoffs,given the speed of promotion in each of the organizations.The probability of fast promotion is 0.6,and the probability of slow promotion is 0.4. -Use the information in Table A.3 and the minimax regret decision rule.The maximum regret is:

A(n)________ is a schematic model of alternatives available to the decision maker,along with their possible consequences.

Table A.2 Use the following to answer the questions below. A company that is introducing a new product has to choose between four different manufacturing methods,referred to as methods A,B,C and D.Depending on the demand for the product,they forecast different levels of expenses for the year (values are in thousands).The company has identified three possible states of nature for economic growth,and named them High,Medium,and Low. -Using the information in Table A.2,which alternative is BEST if further study revealed that the probability of high growth is 0.2,the probability of medium growth is 0.5,and the probability of low growth is 0.3?

The decision rule in decision making under uncertainty that is most appropriate for the pessimistic manager would be:

________ is a technique for systematically changing parameters in a model to determine the effects of such changes.

The first choice in a decision tree is the leftmost decision node.

What assumptions are made when using break-even analysis?

A company that is introducing a new product has to choose between four marketing plans,A through D.The marketing plans are forecasted to have varying payoffs,depending on the level of advertising.The probability of high demand is 0.6 and of low demand 0.4.Use the following decision rules to select the marketing plan: maximin,maximax,minimax regret,Laplace,and expected value.

Table A.2 Use the following to answer the questions below. A company that is introducing a new product has to choose between four different manufacturing methods,referred to as methods A,B,C and D.Depending on the demand for the product,they forecast different levels of expenses for the year (values are in thousands).The company has identified three possible states of nature for economic growth,and named them High,Medium,and Low. -Using the information in Table A.2,which alternative is BEST in accordance with a pessimistic outlook?

Sensitivity analysis is a technique for systematically changing parameters in a model to determine the effects of such changes.