Fanblade, Inc. is a manufacturer of fan blades for jet engines. These blades are where cool air ranging from -50oC to +50oC enters the jet engine. The fan blades are exposed to foreign objects such as dust, rain, and even birds, so they must be corrosive and impact resistant. In addition, when the engine is spinning the fan blades must endure centripetal forces of up to 100 tonnes.

Fanblade, Inc. is considering the possibility of producing a new line of fan blades but cannot decide between using an automatic 3D printing manufacturing technique or producing the blades by traditional methods. This new project will require Fanblade, Inc. to either purchasing a high-end 3D printer or hiring and training four additional employees if they decide to stay with the traditional method of producing fan blades. The market for the fan blade could be either favorable or unfavorable and in the end, Fanblade Inc. may decide not to produce the new blade.

Sales for favorable acceptance by customers would be 20,000 blades selling for $1,900 each. With unfavorable acceptance, sales of the blades would only be 4,000 blades at a selling price of $1,900 each. The initial setup cost of the 3D printing system is $2,000,000 however, the hiring and training of the four new employees would cost only $300,000. In the end, manufacturing costs are $1,700 for each blade when manufacturing without 3D printing and $1,500 each when 3D printed.

The probability of favorable acceptance of the new blade is .20; the probability of unfavorable acceptance is .80.

Your boss has asked you to conduct a decision tree analysis using the scenario above and determine the highest expected value for the project. Your analysis will be presented to the Company Board of Directors, therefore, ensure the appropriate professionalism for a C-Suite audience.

Submit your Excel decision tree along with a short explanation of what decision should be made by the company and how you arrived at your answer.

Answer rating: 100% (QA)

Here is my analysis of Fanblade Incs decision to produce a new line of fan blades using either 3D pr... View the full answer