ISM Chapter 23

# ISM Chapter 23 - .1 a 1 a 2 s 1 29 s 2 5 s 3 14 s 4 36 23.2...

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Unformatted text preview: Chapter 23 23.1 a 1 a 2 s 1 29 s 2 5 s 3 14 s 4 36 23.2 23.3 EMV(a 1 ) = .4(55) + .1(43) + .3(29) + .2(15) = 38.0 EMV(a 2 ) = .4(26) + .1(38) + .3(43) + .2(51) = 37.3 119 23.4 23.5 a 1 a 2 a 3 s 1 15 21 s 2 3 4 s 3 20 5 23.6 EOL(a 1 ) = .2(0) + .6(0) + .2(20) = 4.0 EOL(a 2 ) = .2(15) + .6(3) + .2(5) = 5.8 EOL(a 3 ) = .2(21) + .6(4) + .2(0) = 6.6 The EOL decision is a 1 . 23.7a Produce Demand a a 1 a 2 a 3 s-3.00-6.00-9.00 s 1 5.00 2.00-1.00 s 2 5.00 10.00 7.00 s 3 5.00 10.00 15.00 120 b Produce Demand a a 1 a 2 a 3 s 3.00 6.00 9.00 s 1 5.00 3.00 6.00 s 2 10.00 5.00 3.00 s 3 15.00 10.00 5.00 c 23.8a EMV(a ) = 0 EMV(a 1 ) = .25(-3.00) + .25(5.00) + .25(5.00) + .25(5.00) = 3.00 EMV(a 2 ) = . 25(-6.00) + .25(2.00) + .25(10.00) + .25(10.00) = 4.00 EMV(a 3 ) = . 25(-9.00) + .25(-1.00) + .25(7.00) + .25(15.00) = 3.00 121 EMV decision is a 2 (bake 2 cakes) b EOL(a ) = .25(0) + .25(5.00) + .25(10.00) + .25(15.00) = 7.50 EOL(a 1 ) = .25(3.00) + .25(0) + .25(5.00) + .25(10.00) = 4.50 EOL(a 2 ) = . 25(6.00) + .25(3.00) + .25(0) + .25(5.00) = 3.50 EOL(a 2 ) = . 25(9.00) + .25(6.00) + .25(3.00) + .25(0) = 4.50 EOL decision is a 2 (bake 2 cakes) 23.9 a 1 (flat fee) a 2 Pay per snowfall s-40,000 s 1-40,000-18,000 s 2-40,000-36,000 s 3-40,000-54,000 s 4-40,000-72,000 23.10 EMV(a 1 ) = -40,000 EMV(a 2 ) = . 05(0) + .15(-18,000) + .30(-36,000) + .40(-54,000) +.10(-72,000) = -42,300 EMV decision is a 1 23.11a Payoff Table a 100 a 200 a 300 s 100 12(100)-10(100) 12(100)-9(200)+6(100) 12(100)-8.50(300)+6(200) = 200 = 0 = -150 s 150 12(100)-10(100) 12(150)-9(200)+6(50) 12(150)-8.50(300)+6(150) = 200 = 300 = 150 s 200 12(100)-10(100) 12(200)-9(200) 12(200)-8.50(300)+6(100) = 200 = 600 = 450 s 250 12(100)-10(100) 12(200)–9(200) 12(250)-8.50(300)+6(50) = 200 = 600 = 750 b Opportunity Loss Table a 100 a 200 a 300 s 100 200 350 s 150 100 150 122 s 200 400 150 s 250 550 150 c 23.12 EMV(a 100 ) = 200 EMV(a 200 ) = . 20(0) + .25(300) + .40(600) + .15(600) = 405 EMV(a 300 ) = . 20(-150) + .25(150) + .40(450) + .15(750) = 300 EMV decision is order 200 shirts. 23.13 P(s ) = .607, P(s 1 ) = .303, P(s 2 ) = .076, P(s 3 ) = .012, P(s 4 ) = .002 Payoff Table a a 1 a 2 a 3 s-6,000-12,000-18,000 s 1 7,000 1,000-5,000 s 2 7,000 14,000 8,000 s 3 7,000 14,000 21,000 123 Opportunity Loss Table a a 1 a 2 a 3 s 6,000 12,000 18,000 s 1 7,000 6,000 12,000 s 2 14,000 7,000 6,000 s 3 21,000 14,000 7,000 23.14a EMV(Small) = .15(-220) + .55(-330) + .30(-440) = -346.5 EMV(Medium) = .15(-300) + .55(-320) + .30(-390) = -338.0 EMV(Large) = .15(-350) + .55(-350) + .30(-350) =-350.0 EMV decision: build a medium size plant; EMV*= -338.0 b Opportunity Loss Table Small Medium Large Low 80 130 Moderate 10 30 High 90 40 c EOL(Small) = .15(0) + .55(10) + .30(90) = 32.5 EOL(Medium) = .15(80) + .55(0) + .30(40) = 24.0 EOL(Large) = .15(130) + .55(30) + .30(0) = 36.0 EOL decision: build a medium size plant 23.15a P(s 10 ) = 9/90 = .10, P(s 11 ) = 18/90 = .20, P(s 12 ) = 36/90 = .40, P(s 13 ) = 27/90 = .30 Payoff Table...
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ISM Chapter 23 - .1 a 1 a 2 s 1 29 s 2 5 s 3 14 s 4 36 23.2...

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