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HW13 Solutions - OSCM 230 Homework 13 Solutions HOMEWORK#13...

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OSCM 230 Homework 13 Solutions H O M E W O R K   # 1 3   S O L U T I O N S D E C I S I O N   A N A L Y S I S Problem 8-28.  (a) Conduct survey. If results are favorable, build large shop. If the results are unfavorable, don't build any shop. (b) EVSI = $11,000. EVwPI = $35,400. Best EMV = $19,000. EVPI = $16,400. Efficiency = 67.07%.
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OSCM 230 Homework 13 Solutions 8-40. (a) See file P8-40.XLS for the TreePlan solution. Conduct the survey questionnaire. If the response is positive, produce razor. If the response is negative, do not produce razor. Expected return = $24,160. (b) EVPI = $30,000. EVSI = $9,160. Efficiency = 30.53%. (c) EVPI = $30,000. EVSI = $17,080. Efficiency = 56.93%. Problem 8-46. . See file P8-46.XLS for the TreePlan solution. If the survey is not conducted, the medium facility, with an EMV of $670,000, is selected. If the survey is conducted, we first compute the revised probabilities using Bayes’ theorem, as follows. Prior Probabilities P(Low demand) = 0.15 P(Fair demand) = 0.40
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OSCM 230 Homework 13 Solutions P(High demand) = 0.45 Conditional probabilities P(Low survey | Low demand) = 0.70 P(Fair survey | Low demand) = 0.20
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