7. A bakery must decide how many pies to prepare for the upcoming weekend. The bakery has
the option to make 50, 100, or 150 pies. Assume that demand for the pies can be 50, 100, or
150. Each pie costs $5 to make and sells for $7. Unsold pies are donated
1. ABC Inc. must make a decision on its current capacity for next year. Estimated profits (in
$000's) based on next year's demand are shown in the table below.
Next Year's
Demand
Alternative
Expand
Subcontract
Do Nothing
Low
$100
$50
$40
High
$200
$120
$5
CHAPTER 1
Answer questions
1-1. Decision modeling is the scientific approach to managerial decision-making. This type of analysis is
a logical and rational approach to making decisions. Emotions, guesswork, and whim are not part of the
decision modeling a
COM-315
Chapter 8. Decision Analysis
Usethisinformationtoanswerthefollowingquestions.
ABC Inc. must makeadecisiononits currentcapacityfor next year. Estimated profits (in
$000s) based on next year's demand are shown in the table below.
NextYear'sDemand
Al
Photo Copy Machine Company
Number of units
Profit
PJ
PD
PP
Print Jet
168
$60
Print
Desk
287
$90
Print Pro
683
$73
2.9
1.4
3.7
2.1
3
1.7
Total Productio
Total Units
1139
$85,811.88
Profit
Constraints:
Assembly Time (hrs)
Testing Time (hrs)
3600.0
2000.0
<=
Campaign Advertising
SS
SL
R
BS
Bumper
Small
Radio
Sticker Per
Sign Large Sign Advertising Thousand
Number of units
Votes Gardnered
Constraints:
Max Small Sign
Max Large Sign
Max Radio
Max Bumper Sticker
Max Personal Mailer
Min Small Sign
Min Large Sign
M
Lettuce Distributor - Manual Process
Lettuce Distributor - Mechanized P
Known Parameters
Known Parameters
Selling price per unit
Fixed cost
Variable cost per unit
$2.50
$43,400.00
$1.80
Selling price per unit
Fixed cost
Variable cost per unit
Variables
Nu
Bismark Manufacturing - Proposal A
Known Parameters
Selling price per unit
Fixed cost
Variable cost per unit
Known Parameters
$18.00
$65,000.00
$10.00
Variables
Number of units, X
Results
Total revenue
Fixed cost
Total variable cost
Total cost
Profit
Bism
11. Refer to problem 10. Based on its historical demand distribution, assume that AAA Inc. has
determined the following probability information: P(100) = 0.4, P(150) = 0.3, and P(200) =
0.3.
a. Which alternative should be chosen using the expected monetar
16. A defense contractor has submitted a bid to make new helmets for the army. The defense
contractor believes that the odds of winning the bid stand at 50 - 50 chance. Past history
indicates that if the bid is successful, there is a 0.75 probability that
Microsoft Excel 14-1 Sensitivity Report
Worksheet: [4-14.xls]4-14
Report Created: 9/20/2012 3:46:14 PM
Variable Cells
Final Reduced Objective AllowableAllowable
Cell
Name
Value
Cost
Coefficient Increase Decrease
$B$5 Number of households <= 30 and border
Personal Mini Warehouses
X
Number of units
Profit
Constraints:
Advertising Budget
Sq Feet Required
Rental Limit
Y
Large
Small
Spaces Spaces
60.0
40.0
$50
$20
2
100
1
4
50
$3,800.00 <- Objective
280.0
8000.0
60.0
LHS
<=
<=
<=
Sign
400
8000
60
RHS
Flair Furniture
Number of Units
Profit
Constraints:
Carpentry Hours
Painting Hours
Chairs Limit
T
Tables
30.0
$7.00
C
Chairs
40.0
$5.00
4
2
3
1
1
$410.00
240.0
100.0
40.0
LHS
<- Objective
<=
<=
<=
Sign
240
100
60
RHS
Flair Furniture
T
Tab
les
Number of Un