Homemakers Ltd. specializes in producing houses. Management observed that when the weather conditions are good; the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Homemakers Ltd. specializes in producing houses. Management observed that when the weather conditions are good; the pace at which the houses are built increases since more building work is able to take place. The operators are now trying to work out the level of home production for the coming year in order to maximize profits. Homemakers Ltd. does not want to miss out on the opportunity to earn large profits by not being able to satisfy demand. However, it doesn't want to be left with large quantities of unsold houses at the end of the year. Management has decided to produce at one of the three levels of production to match forecast demand. Supply (number of houses) 175,000 140,000 100,000 Weather Probability $875,000 $700,000 $500,000 Good 0.20 $542,500 $700,000 $500,000 Demand Average 0.50 $162.500 $320,000 $500,000 Poor 0.30 Required: a) What is the level of production based on the maximin, maximax and the minimax regret decision rule? (7 marks) b) Prepare an expected values table and identify the level of production based on expected values. (6 marks) Homemakers Ltd. specializes in producing houses. Management observed that when the weather conditions are good; the pace at which the houses are built increases since more building work is able to take place. The operators are now trying to work out the level of home production for the coming year in order to maximize profits. Homemakers Ltd. does not want to miss out on the opportunity to earn large profits by not being able to satisfy demand. However, it doesn't want to be left with large quantities of unsold houses at the end of the year. Management has decided to produce at one of the three levels of production to match forecast demand. Supply (number of houses) 175,000 140,000 100,000 Weather Probability $875,000 $700,000 $500,000 Good 0.20 $542,500 $700,000 $500,000 Demand Average 0.50 $162.500 $320,000 $500,000 Poor 0.30 Required: a) What is the level of production based on the maximin, maximax and the minimax regret decision rule? (7 marks) b) Prepare an expected values table and identify the level of production based on expected values. (6 marks)
Expert Answer:
Answer rating: 100% (QA)
Solution a Based on maximin criteria we look at the minimum payoffs from each supply value... View the full answer
Posted Date:
Students also viewed these accounting questions
-
Don Corp. estimates that its production for the coming year will be 10,000 widgets, which is 80% of normal capacity, with the following unit costs: materials, P40; direct labor, P60. Direct labor is...
-
Milaya Ltd specializes in producing customized souvenirs for special occasions. The company has two production departments, Machining and Assembly. and two service departments. Administration and...
-
What management levels are more likely to deal with unstructured problems? With structured problems? Why?
-
Midwest Inc. is a medium-size company that has been in business for 20 years. The industry has become very competitive in the last few years, and Midwest has decided that it must grow if it is going...
-
Calculate the missing amounts for each of the Prepaid Insurance situations. For situation A, journalize the adjusting entry. Consider each situationseparately. Situation 300 700S600 Beginning Prepaid...
-
The swap spread is the difference between the swap rate and the equivalent-maturity Treasury bond yield. Explain why a widening swap spread may be a signal of deteriorating economic conditions. Plot...
-
A managers failure to enforce a late-to-work policy the same way for all employees is a violation of ____________ justice. (a) interactional (b) moral (c) distributive (d) procedural
-
Rob and Laura wish to buy a new home. The price is $300,000 and they plan to put 25% down. New Rochelle Savings and Loan will lend them the remainder at 8% per annum, compounded semi-annually for a...
-
A company produces two types of drills, a corded and cordless. The card-type drill requires 2 hours to make, and the cordless model requires 3 hours. The company has 360 work hours per day for...
-
Raymond Constructions trial balance at December 31, 2020, is presented as follows. All 2020 transactions have been recorded except for the items described below. Unrecorded transactions: 1. On May 1,...
-
At what rate is thermal energy generated (electric power) in the 5 2 resistor when &=34 V? Imm 10 22 A. 0.26 W B. 25.69 W C. 6.42 W D. 5.67 W 5.0 2 10 22 10 10
-
Write object-oriented Swift code for the following. The unit codes of four IT units are passed into a method of a class. The units passed in are as follows (and they are passed in this order too):...
-
Guchi and Pluto are in a statistics class. At the end of the semester, after 5 exams, Guchi has a mean of 60 and standard deviation of 20 for exams. Pluto has a mean of 60 and standard deviation of 5...
-
How important is innovation in the Vernon model? I know that the timing of innovation is important, because is has implications on the location of production. Is there another part in which...
-
The pretax financial income (or loss) figures for Sunland Company are as follows. 2015$176,000 2016 243,000 201779,000 2018(176,000) 2019(390,000) 2020 118,000 202190,000 Pretax financial income (or...
-
the account in the ledger of monroe entertainment co . are listed . All accounts have normal balances. account payable 4 3 9 , fees earned 3 2 8 3 , accounts receivable 6 5 7 , insurance expense 5 8...
-
A table of notes receivable for 2024 follows (Click the icon to view the table of notes receivable for 2024) For each of the notes receivable, compute the amount of interest revenue eamed during...
-
C- Consider the following scenario:- A supermarket needs to develop the following software to encourage regular customers. For this, the customer needs to supply his/her residence address, telephone...
-
The United States is the largest producer of corn in the world. Each year, a corn farmer must decide what type of seed to use and what the end market for the corn crop will be. In approximately a...
-
Why do buyers involved in straight rebuy purchases require less information than those making new-task purchases?
-
Why might business customers generally be considered more rational in their purchasing behavior than ultimate consumers?
Study smarter with the SolutionInn App