Interrelation between product development and process technology. LG has two design options for a new line of high

$-$

resolution monitors: i

$.$

$$Design I has a

$9$

$0$

$\%$

$$probability of yielding

$6$

$5$

$$good monitors per

$1$

$0$

$0$

$($

i

$.$

e

$.$

$,$

$$yield rate is

$6$

$5$

$\%$

$)$

$$and a

$1$

$0$

$\%$

$$probability of yielding

$8$

$0$

$$good monitors per

$1$

$0$

$0$

$.$

$$This development will cost $

$1$

$,$

$0$

$0$

$0$

$,$

$0$

$0$

$0$

$$as initial investment. This type of monitor can be sold for $

$1$

$5$

$0$

$.$

$$ii

$.$

$$Design option II has a

$8$

$0$

$\%$

$$probability of yielding

$6$

$4$

$$good units per

$1$

$0$

$0$

$$and a

$2$

$0$

$\%$

$$probability of yielding

$5$

$9$

$$good units per

$1$

$0$

$0$

$.$

$$This development will cost $

$1$

$,$

$3$

$5$

$0$

$,$

$0$

$0$

$0$

$$as initial investment. This type of monitor can be sold for $

$1$

$5$

$5$

$.$

$$The production of each monitor

$($

whether defective or not

$)$

$$will cost $

$7$

$5$

$.$

$$LG must pay production costs on all monitors, whether defective or perfect. But it can sell only perfect monitors. The life cycle for this model is two years with

$1$

$0$

$0$

$,$

$0$

$0$

$0$

$$units of demand per year. Note that the output of the production line will be less than

$1$

$0$

$0$

$,$

$0$

$0$

$0$

$$units based on yield rates. LG does not necessarily aim to satisfy all the demand. Develop a decision tree, calculate payoffs for the branches of the tree, and calculate EMVs of the alternatives. a

$)$

$$Which design should be chosen based on EMVs? Show your calculations. b

$)$

$$Assuming part a

$)$

$,$

$$defective monitors have an estimated salvage value since many parts of it can be recycled and used in other products. Design I has salvage value $

$2$

$5$

$$per unit, while Design II has salvage value $

$3$

$0$

$$per unit. Which design should be chosen based on EMVs? Show your calculations. No need to draw a new decision tree.

$($

Yield rate means the rate of perfect monitors produced by the process. For example, if yield rate is

$8$

$0$

$\%$

$,$

$$it means out of

$1$

$0$

$0$

$$monitors$,$

$8$

$0$

$$monitors are perfect and

$2$

$0$

$$monitors are defective.

$)$

$$ANSWER:new one he liked. Another dealer hired a consultant to review the quality of the pianos he had purchased from Fazioli. He claimed that the soundboard, a key contributor to a piano's quality, had developed cracks. The consultant reported that this problem "indicated inadequate or improper controls over wood moisture content during various stages of manufacture." Subsequent study indicated that Fazioli's new production quotas might have caused workers to pull wood from the conditioning rooms before it was ready to be bent into a piano. What are order winners and order qualifiers? What did new owners change in the process to improve it

$?$

$$What are the mistakes made by owners at Fazioli? What is the gap between operations resources and market requirements? What are your

$($

at least three

$)$

$$recommendations to close the gap? ANSWER: