Ask Question, Ask an Expert


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

Question 1 what elements in the process safety management

Question 1. What elements in the Process Safety Management Standard does OSHA's Hazard Communication Standard complement? Provide examples in your discussion. Your essay response must be a minimum of 200 words in length. ...

Lets begin our discussion on recruitment by using a fact

Let's begin our discussion on recruitment by using a fact pattern from a litigated case. Cone Mills Corporation had several recruiting procedures that gave preferential treatment to applicants who either had family membe ...

Hypothesis testing assumptionsresourcesscoring guide icon

Hypothesis Testing Assumptions Resources scoring guide icon Discussion Participation Scoring Guide. For its validity, all hypothesis testing depends heavily on the assumption that the sample was drawn using probability s ...

Of the trends that were discussed in the readings eg

Of the trends that were discussed in the readings (e.g. technology, workforce diversity, big data, mobile learning, etc.), which two or three do you think will influence Training and Development (TD) professionals in org ...

National scan inc sells radio frequency inventory tags

National Scan, Inc., sells radio frequency inventory tags. Monthly sales for a seven-month period were as follows: Month Sales (000)Units Feb.               16 Mar.               17 Apr.               13 May.             ...

The friendly sausage factory fsf can produce hot dogs at a

The Friendly Sausage Factory (FSF) can produce hot dogs at a rate of 5,000 per day. FSF supplies hot dogs to local restaurants at a steady rate of 250 per day. The cost to prepare the equipment for producing hot dogs is ...

Identify a recent incident within last six months and

Identify a recent incident (within last six months) and discuss illegal, unethical, and socially responsible bussiness actions in the current news. Include a link to the news article in your discussion post. Note: If we ...

Do you believe that the classical conditioning approach of

Do you believe that the classical conditioning approach of learning can be applied to human beings? If yes, provide an example. Your example must be reasonable and logical. Specifically, you example must be applicable to ...

1 how would you characterize the competitive strategy of

1. How would you characterize the competitive strategy of Amazon? What are the key customer needs that Amazon aims to fill? 2. Where would you place the demand faced by Amazon on the implied demand uncertainty spectrum? ...

Leadership development succession development through

Leadership Development Succession Development, Through Self-Awareness and Self-Discipline Within this section, explain and discuss how the following aspects are critical in the leadership development succession developme ...

  • 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

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate