Extra Problem 6 - Solving Decision Trees - Solution Key

Extra Problem 6 - Solving Decision Trees - Solution Key -...

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EMSE 269 - Elements of Problem Solving and Decision Making Instructor: Dr. J. R. van Dorp 1 EXTRA PROBLEM 6: SOLVING DECISION TREES Read the following decision problem and answer the questions below. A manufacturer produces items that have a probability of . p being defective These items are formed into . Past experience indicates that batches of 150 some are of and others are of (batches) good quality (i.e. p=0.05) bad quality (i.e. p=0.25). Furthermore, of the batches produced are of 80% good quality and These items are then used in an 20% of the batches are of bad quality. assembly, and ultimately their quality is determined before the final assembly leaves the plant. The manufacturer can either in a batch and screen each item replace defective items at a total average cost of $10 per item or use the items directly without screening. the latter action If is chosen, the cost of rework is ultimately $100 per defective item. For these data, the costs per batch can be calculated as follows: p = 0.05 p = 0.25 Screen $1500 $1500 Do not Screen $750 $3750 Because screening requires scheduling of inspectors and equipment, the decision to screen or not screen must be made 2 days before the potential
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EMSE 269 - Elements of Problem Solving and Decision Making Instructor: Dr. J. R. van Dorp 2 screening takes place. However, the manufactures may take one item taken from a batch and sent it to a laboratory, and the test results (defective or non- defective) can be reported must be before the screen/no-screen decision made. After the laboratory test, The the tested item is returned to its batch.
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This note was uploaded on 12/04/2011 for the course BUSINESS 500 taught by Professor John during the Spring '11 term at Kansas.

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Extra Problem 6 - Solving Decision Trees - Solution Key -...

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