A company is to choose proposals A or B or do nothing. High ($) Medium ($)...

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A company is to choose proposals A or B or do nothing. High ($) Medium ($) 2,650,000 1,432,000 3,358,000 2,312,000 0 0 Proposals A Proposals B Do nothing 0.3 0.5 Low ($) -800,000 -950,000 0 Probability Using the EMV approach, which scenario should the company choose? (8 marks) 0.2 & DGT Ltd specialises in the manufacture of lawn rakes. Every 6 months, it buys 1500 rake handles from Kilmarnock Timber Mills at a cost of $1.50 per handle. The clerical and processing cost is $75 per order, and each handle costs $1.80 per annum to store. Calculate the economic order quantity (EOQ), the number of orders that must be placed for the whole year, the total ordering, the holding cost and the total cost with EOQ. A company is to choose proposals A or B or do nothing. High ($) Medium ($) 2,650,000 1,432,000 3,358,000 2,312,000 0 0 Proposals A Proposals B Do nothing 0.3 0.5 Low ($) -800,000 -950,000 0 Probability Using the EMV approach, which scenario should the company choose? (8 marks) 0.2 & DGT Ltd specialises in the manufacture of lawn rakes. Every 6 months, it buys 1500 rake handles from Kilmarnock Timber Mills at a cost of $1.50 per handle. The clerical and processing cost is $75 per order, and each handle costs $1.80 per annum to store. Calculate the economic order quantity (EOQ), the number of orders that must be placed for the whole year, the total ordering, the holding cost and the total cost with EOQ.

Answer rating: 100% (QA)

ANSWER EMV Approach First we need to calculate the Expected Monetary Value EMV for each proposal by ... View the full answer