Edwards Machine Tools needs to purchase a new machine. The basic model is slower but costs...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Edwards Machine Tools needs to purchase a new machine. The basic model is slower but costs less, whereas the advanced model is faster but costs more. Profitability will depend on future demand. The following table presents an estimate of profits over the next three years. Low High Decision Basic model Advanced model $90,000 $145,000 $50,000 $225,000 Fill in the table below for maximum and minimum profit payoffs under each model. Round your answers to the nearest dollar. $ $ Opportunity Loss Matrix Decision alternative Basic model Advanced model Maximum Decision alternative Basic model Advanced model Calculate the amounts foregone by not adopting the optimal course of action for each possible demand level. Determine the maximum opportunity cost for each model. Fill in the table below. If your answer is zero, enter "0". Round your answers to the nearest dollar. $ $ Minimum Low Demand Volume Future events Medium High Medium $115,000 $90,000 Maximum $ $ Given the uncertainty associated with the demand volume, and no other information to work with, what decision would you make? The aggressive strategy (maximax) is to oose the -Select- The conservative strategy (maximin) is to choose the -Select- The opportunity loss strategy is to choose the -Select- 6 Payoff Table 7 Decision Alternative 8 Expand existing plant 9 Build new plant 10 _1 _2 13 Probability _4 5 Opportunity Loss Matrix 6 Decision Alternative 17 Expand existing plant 8 Build new plant 9 20 21 22 23 Maximax Decision 24 Maximin Decision 25 Opportunity Loss Decision 26 Expected Value Decision 27 EVPI 1 Decision Analysis 2 Enter the data only in the yellow cells. 3 This template is designed to allow up to 5 decision alternatives and future events. 4 Enter names of decision alternatives and future events in the appropriate cells in column A or K and row 7. Probabilities are optional. 5 Future Events Low Product Demand High Product Demand $200,000.00 $300,000.00 $100,000.00 $450,000.00 Future Events Low Product Demand High Product Demand $0.00 $150,000.00 $100,000.00 $0.00 Build new plant Expand existing plant Build new plant D #N/A #N/A G ⒸCengage Learning Not for commercial use. H Maximum Minimum Expected Value $300,000.00 $200,000.00 $450,000.00 $100,000.00 Maximum Expected Value Maximum $150,000.00 $100,000.00 $0.00 Edwards Machine Tools needs to purchase a new machine. The basic model is slower but costs less, whereas the advanced model is faster but costs more. Profitability will depend on future demand. The following table presents an estimate of profits over the next three years. Low High Decision Basic model Advanced model $90,000 $145,000 $50,000 $225,000 Fill in the table below for maximum and minimum profit payoffs under each model. Round your answers to the nearest dollar. $ $ Opportunity Loss Matrix Decision alternative Basic model Advanced model Maximum Decision alternative Basic model Advanced model Calculate the amounts foregone by not adopting the optimal course of action for each possible demand level. Determine the maximum opportunity cost for each model. Fill in the table below. If your answer is zero, enter "0". Round your answers to the nearest dollar. $ $ Minimum Low Demand Volume Future events Medium High Medium $115,000 $90,000 Maximum $ $ Given the uncertainty associated with the demand volume, and no other information to work with, what decision would you make? The aggressive strategy (maximax) is to oose the -Select- The conservative strategy (maximin) is to choose the -Select- The opportunity loss strategy is to choose the -Select- 6 Payoff Table 7 Decision Alternative 8 Expand existing plant 9 Build new plant 10 _1 _2 13 Probability _4 5 Opportunity Loss Matrix 6 Decision Alternative 17 Expand existing plant 8 Build new plant 9 20 21 22 23 Maximax Decision 24 Maximin Decision 25 Opportunity Loss Decision 26 Expected Value Decision 27 EVPI 1 Decision Analysis 2 Enter the data only in the yellow cells. 3 This template is designed to allow up to 5 decision alternatives and future events. 4 Enter names of decision alternatives and future events in the appropriate cells in column A or K and row 7. Probabilities are optional. 5 Future Events Low Product Demand High Product Demand $200,000.00 $300,000.00 $100,000.00 $450,000.00 Future Events Low Product Demand High Product Demand $0.00 $150,000.00 $100,000.00 $0.00 Build new plant Expand existing plant Build new plant D #N/A #N/A G ⒸCengage Learning Not for commercial use. H Maximum Minimum Expected Value $300,000.00 $200,000.00 $450,000.00 $100,000.00 Maximum Expected Value Maximum $150,000.00 $100,000.00 $0.00
Expert Answer:
Answer rating: 100% (QA)
ANSWER To fill in the table for minimum and maximum profit payoffs under each model we can use the information provided in the table Decision alternat... View the full answer
Related Book For
OM operations management
ISBN: 978-1285451374
5th edition
Authors: David Alan Collier, James R. Evans
Posted Date:
Students also viewed these accounting questions
-
EdwardsMachine Tools needs to purchase a new machine. The basic model is slower but costs less, while the advanced model is faster but costs more. Profitability will depend on future demand. The...
-
Edwards Machine Tools needs to purchase a new machine. The basic model is slower but costs less, while the advanced model is faster but costs more. Profitability will depend on future demand. The...
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
Locate the centroid of the region bounded by the given curves. about x = 5, y = 2x2, y = 0, x = 5 < UseHorizontal ElementOf Area > x = 5 y = 2x? y = 0
-
A particle moves with speed 0.8c along the x axis of frame S, which moves with speed 0.8c along the x axis relative to frame S. Frame S moves with speed 0.8c along the x axis relative to frame S. (a)...
-
A wind turbine with a rotor diameter of 40 m produces 90 kW of electrical power when the wind speed is 8 m s 1 . The density of air impinging on the turbine is 1.2 kg m 3 . What fraction of the...
-
Prepare a preliminary design for a solar PV system to provide \(1 \mathrm{~kW}\) of stand-alone \(24 \mathrm{~h} /\) day power to a travel trailer. Make a schematic diagram of the overall system, a...
-
Revenue and expense data for Mandell Technologies Co. are as follows: a. Prepare an income statement in comparative form, stating each item for both 2012 and 2011 as a percent of sales. Round to one...
-
Identify some of the recommended actions that leaders can take to create conditions conducive to learning in an organization.
-
Three employees in the maintenance department are responsible for repairing the video games at Pinball Wizard, a video arcade. A maintenance worker can fix one video game machine every B hours on...
-
Use Gauss Elimination Method to solve the following equations 2x1 + X2 + 2x3 + X4 = 6 ... . .(a) Ans: x=2, x=1,x3=-1,x4-3 , -, + 3 + 1243 36.. . (b) %3D 4x, + 3x, + 3x - , 31 . (c) %3D ......... 2x1...
-
Your broker is advising you to buy a 5-year 10,000 face value bond of M Co. Ltd. The bond pays annual coupon payments. Its coupon rate is 7.00%. Assuming that the annualized yield to maturity is...
-
Are there similar financial institutions to Raven Indigenous Capital Partners in Australia? If so, are they also pursuing impact investing to provide finance to Australian Indigenous entrepreneurs?...
-
1) Calculate a forward Exchange rate 2)Calculate the CDN $ proceeds Export Euros 6,000,000 Canada Interest rate 3% per annum (365 day year) France Interest Rate 2% per annum Spot Rate 1.35000...
-
Brandy has $150,000 left to pay on her current mortgage and is going to refinance to a lower interest rate and shorter term. The new APR is 3.75% and she is switching to a 15-year term. What is her...
-
OnlineEduc has an EPS of 5, with 12 million shares outstanding. The shares are trading at 13 each. It is thinking of acquiring ClassRoom that has an EPS of 1, with 10 million shares outstanding which...
-
A company issued 25,000 preference shares. For $15 per share and incurs $75,000.In share issue cost. Under the offset method, the share issue costs should be debited to what account?
-
The following selected information was taken from Sun Valley Citys general fund statement of revenues, expenditures, and changes in fund balance for the year ended December 31, 2019: Revenues:...
-
List some common processes that you perform as a student. How can you use the knowledge from this chapter, such as identifying bottlenecks, to improve them?
-
Explain how the goal post view of conforming to specifications differs from Taguchis loss function. Would you rather buy an automobile where suppliers used the goal post or Taguchi models? Why?
-
An accounts receivable manager processes 200 checks per day with an average processing time of 15 working days. What is the average number of accounts receivable checks being processed in her office?...
-
Derive the expression for the complex frequency response of an undamped torsional system.
-
A single-story building frame is subjected to a harmonic ground acceleration, as shown in Fig. 3.57. Find the steady-state motion of the floor (mass \(m\) ). Figure 3.57:- 22 -x(t) m (!) - A cos cot...
-
Find the horizontal displacement of the floor (mass \(m\) ) of the building frame shown in Fig. 3.57 when the ground acceleration is given by \(\ddot{x}_{g}=100 \sin \omega t \mathrm{~mm} /...
Study smarter with the SolutionInn App