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Management Studies

Michael Dell, president of Dell Computers, Inc., has two design options for his new high resolution flat screen monitors for CAD workstations. The life cycle sales forecast of the monitors is 100,000 units. Design option A has a 0.70 probability of yielding 59 good monitors per 100 and 0.3 probability of yielding 64 good monitors per 100. This design cost is $1,000,000. Design option B has a 0.60 probability of yielding 64 good units per 100 and 0.40 probability of yield 59 good units per 100. This design will cost $1,350,000. Good or bad, each monitor will cost $75. Each good monitor will sell for $150. Bad monitors are destroyed and have no salvage value. We ignore any disposal cost in this problem. Which design option should be selected and what is its expected monetary value (EMV)? Note: You must select both parts correctly to get credit for this answer.

A. Design A; EMV=$450,000

B. Design B ; EMV=$450,00

C. Design A; EMV=$575,000

D. Design B; EMV=$575,000

E. Do nothing; $0

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M91575279

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