836956-UNIT 9_FINAL_PROJECT_QUANTATIVE METHOD CHECK AND EDIT PLEASE

# 836956-UNIT 9_FINAL_PROJECT_QUANTATIVE METHOD CHECK AND EDIT PLEASE

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MMO305 Final Project Problems 1. Modern Electronics specializes in manufacturing modern electronic components. It also builds the equipment that produces the components. Modern Electronics is considering building a new facility but the estimated profits would be impacted by the type of market that develops. The probability for a strong market is 0.3; for a fair market is 0.5; and for a poor market is 0.2. You are responsible for advising the president of Modern Electronics on the type facility that should be built or to not build a facility at all. The table shows the estimated profits under each market and for each size facility. Estimated Profits Strong Market Fair Market Poor Market Build a large facility 550,000 110,000 -310,000 Build a medium-size facility 300,000 129,000 -100,000 Build a small facility 200,000 100,000 -32,000 Do not build a facility 0 0 0 Using the information in the table above develop a recommendation for your president. Be sure to explain why you are making the recommendation and you must include a recommendation that maximizes profits and a recommendation that minimizes loss. 1.1. Appropriate Technique Decision Analysis is the best technique for making recommendation to the President of Modern Electronics. Most popular method is to choose the alternative with the highest 1 EMV (alternative  i ) =  (payoff of first state of nature) x (probability of first state of nature) +  (payoff of second state of nature) x (probability of second state of  nature) +  … +  (payoff of last state of nature) x (probability of last state of nature)

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MMO305 Final Project Problems expected monetary value (EMV). Since the decision making environment is risk based it is appropriate to use EMV. 2
MMO305 Final Project Problems 1.2. A pplication of the technique and Evidence Modern Electroinics Decision Tables Data Results Profit Strong Market Fair Market Poor Market EMV Minimum Maximum Probability

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836956-UNIT 9_FINAL_PROJECT_QUANTATIVE METHOD CHECK AND EDIT PLEASE

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