QNT 561 Week 3 Alexis Pixler.xlsx - Medium-Scale Expansion...

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Medium-Scale Large-Scale Expansion Profits Expansion Profits P(x) P(x) Demand Low 50 20% 0 20% Medium 150 50% 100 50% High 200 30% 300 30% Expected Profit ($1000s) 145 140 Risk Analysis for Medium-Scale Expansion Demand (x - µ) Low 50 20% -95 9025 1805 Medium 150 50% 5 25 12.5 High 200 30% 55 3025 907.5 2,725 σ = 52.2 Risk Analysis for Large-Scale Expansion Demand (x - µ) Low 0 20% -140 19600 3920 Medium 100 50% -40 1600 800 High 300 30% 160 25600 7860 12,400 σ = 111.36 Annual Profit ($1000s) Annual Profit ($1000s) Annual Profit (x) $1000s Probability P(x) (x - µ) 2 (x - µ) 2 * P(x) σ 2 = Annual Profit (x) $1000s Probability P(x) (x - µ) 2 (x - µ) 2 * P(x) σ 2 = Case Study 2: What should be the re-order point? R=dL + Z*σ*√L

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