Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Operation Management Expert

problem: Spencerville Products is growing its operations west of the Mississippi. Its primary step is to build a manufacturing facility in the Denver to please demand on the West Coast.  Spencerville consists of an option to build either a large facility which has an annual output of 500,000 units per year or a smaller facility with an output of 250,000 units per year. It should build one of these two facilities - it doesn’t have any other options.

The expected demand for the company's products is shown as either high or moderate in the table shown below:

Demand Level        Annual Demand (units/year)            Probability
High                                 450,000                                      0.4
Moderate                         150,000                                      0.6

The small facility has a profit of $5.00 per unit. The big facility has a profit of $4.00/unit.

a) What size facility must Spencerville Products build based on the expected values and by using a decision tree approach? You should also provide the decision tree by using the suitable decision tree symbols.

b) Assume that the company is not certain regarding the 450,000 projection for the High Demand scenario. It could be more than this projection. How sensitive is the selection in (a) to the High Demand projection. In another words, at what annual demand for High Demand scenario would the company be indifferent among the two size facilities?        

Operation Management, Management Studies

  • Category:- Operation Management
  • Reference No.:- M99865

Have any Question? 


Related Questions in Operation Management

Why is there still gender inequality within the corporate

Why is there still gender inequality within the corporate work place, especially within the executive levels? How to reduce the gap?

Assignment om course project om as a competitive advantage

Assignment : OM Course Project: OM as a Competitive Advantage in Your Organization This project will help you synthesize and apply what you have learned in the Operations Management course to your organization. Keep in m ...

You are an employer with 15 full time employees paying an

You are an employer with 15 full time employees, paying an average wage of $30,000 a year. You are concerned about how the requirements of the federal healthcare legislation will affect you. Some other business owners yo ...

Assignment 1-write a research paper concerning this

Assignment 1- Write a research paper concerning this scenario: You have been charged with the development of a Crisis Management Plan for the real or hypothetical health care organization that you chose earlier in this c ...

Abigails auto repair uses 500 oil filters every month

Abigail's Auto Repair uses 500 oil filters every month. Abigail has just taken a course in supply chain management, and as a result has solicited two new suppliers for these packs, with the following price structures: Su ...

State your commentsopinion with at least 200 words each

State your comments/opinion with at least 200 words each related to: 1-Place yourself in the position of general manager of a service department. How might formally written job requirements help you manage your work unit ...

Your intern is confused about the difference between

Your intern is confused about the difference between physical and logical system models. Explain the difference between the two models to her and give at least one example for each of the two models.

1 why do some companies still try to inspect to eliminate

1. why do some companies still try to inspect to eliminate defective items: 2. the process of getting from An Aggregate Plan to A Master Schedule (MPS): 3. What is the importance of a doable, accurate MPS: 4. how do we v ...

Please do not make it public now make it days lateralpha

Please do not make it public now make it days later Alpha Manufacturing co. wants to hire a new Operation Manager for their New Plant. You were considered as a one of the potential candidate for this position of high exp ...

1 why should construction organizations go through the

1. Why should construction organizations go through the effort of doing projections and budgets? 2. Explain the concept of sustainable competitive advantage and why it is important. 3. Explain what a surety looks for in ...

  • 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

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen