Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Operation Management Expert

Expando, Inc. is considering the possibility of building an additional factory that would produce a new addition to their product line. The company is currently considering three alternatives: build small plant, build large plant, and do nothing. If the company builds the small plant and the demand for the new product is low, then the company expects to receive $10 million in discounted revenues (present value of future revenues) and incur $7 million in discounted costs (initial construction costs plus present value of future cost). If the company builds the small plant and the demand for the new product is high, then the company expects to receive $12 million in discounted revenues and incur $8 million in discounted costs. If the company builds the large plant and the demand for the new product is low, then the company expects to receive $10 million in discounted revenues and incur $9 million in discounted costs. If the company builds the large plant and the demand for the new product is high, then the company expects to receive $14 million in discounted revenues and incur $10 million in discounted costs. If the company does nothing, then no additional revenue would be generated nor additional cost incurred because the current factories cannot produce these new products. Regardless of what alternative the company implements, the probability of demand for the new product being high is 0.40 and the probability of demand for the new product being low is 0.60. Construct a decision tree to help Expando make the best decision. What is the best decision?

Operation Management, Management Studies

  • Category:- Operation Management
  • Reference No.:- M91881119

Have any Question?


Related Questions in Operation Management

1 pick a brand and go to its website locate as many forms

1. Pick a brand and go to its website. Locate as many forms of communication as you can find on the website. Conduct an informal communications audit. What do you notice?   How consistent are the different communications ...

1 research the process of system development life cycle

1. Research the process of system development life cycle. Discuss some of the problems of the SDLC and how agile development intends to address these problems. Support your answer with an example of an agile development ...

1 toyota is unable to stay ahead of the company general

1. Toyota is unable to stay ahead of the company General Motors in the Chinesee Market. What can be a recommended solution for them to try to overcome this issue? In other words, what should they do to try to stay ahead ...

Gentle bens bar and restaurant uses 6600 quart bottles of

Gentle Ben's Bar and Restaurant uses 6,600 quart bottles of an imported wine each year. The effervescent wine costs $4 per bottle and is served only in whole bottles because it loses its bubbles quickly. Ben figures that ...

Case study crocs revolutionizing an industrys supply chain

Case Study Crocs: Revolutionizing an Industry's Supply Chain Model for Competitive Advantage Read the attached case study and answer the following questions: 1. What are Croc's core competencies? what are their advantage ...

Examine the differences between state and federal

Examine the differences between state and federal regulations of managed care. Which regulations have more impact on managed care? Explain. Requirements: Submit your essay in a Word document. This assignment must be at l ...

1 at a stote demand during leadtime for bottoles of milk is

1. At a stote, demand during leadtime for bottoles of milk is normal with a mean of 50 and standard deviation of 15. How many additional bottles of milk must be on-hand when placing the order so that the service level is ...

1 define and list the marketing strategies based on

1. Define and list the Marketing Strategies based on Segmentation Considerations. Which strategy(s) would you consider for your small business? Why? 2. Do you believe, in your opinion, that an individual who is responsib ...

1 discuss the impact of management myopia and

1) Discuss the impact of management myopia and organizational culture on the globalization of a corporation? 2) Giving examples to show the differences between ethnocentric and polycentric orientation. 3) List and descri ...

Read the following scenariodr bill mattes the provost for

Read the following scenario: Dr. Bill Mattes, the Provost for Harrisburg University (HU), is hosting a campus event and she wants to ensure it is a complete success. Your group has been asked to manage risks associated w ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As