ayue Is The company is evaluating three different expansion plans: Minor, moderate, or major. They can, of course, also do nothing. Long-term profitability will be a function of future demand growth for the chemical compound. The following payoff table gives the present worth future profitability (in $1,000's) estimated by Unidyde management: Demand Growth for Chemical Compound High Medium Low Do Nothing Minor 140 120 120 Expansion Moderate Major 150 220 -260 250 100 -450 1. What is Unidyde's optimal decision if it wishes to minimize its maximum regret? 2. What is Unidyde's optimal decision if it uses the equal likely criteria? 3. Suppose Unidyde estimates the following probabilities hold for demand growth of the chemical compound: P(High Growth) =.20 P(Medium Growth) = .40 P(Low Growth) =.40 4. What is the most that Unidyde should pay for sample information regarding the compound's future growth? (Hint: calculate the EVPI )

ayue Is The company is evaluating three different expansion plans: Minor, moderate, or major. They can, of course, also do nothing. Long-term profitability will be a function of future demand growth for the chemical compound. The following payoff table gives the present worth future profitability (in $1,000's) estimated by Unidyde management: Demand Growth for Chemical Compound High Medium Low Do Nothing Minor 140 120 120 Expansion Moderate Major 150 220 -260 250 100 -450 1. What is Unidyde's optimal decision if it wishes to minimize its maximum regret? 2. What is Unidyde's optimal decision if it uses the equal likely criteria? 3. Suppose Unidyde estimates the following probabilities hold for demand growth of the chemical compound: P(High Growth) =.20 P(Medium Growth) = .40 P(Low Growth) =.40 4. What is the most that Unidyde should pay for sample information regarding the compound's future growth? (Hint: calculate the EVPI )

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section: Chapter Questions

Problem 46P

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Scenario 4 Sharon Gillespie, a new buyer at Visionex, Inc., was reviewing quotations for a tooling contract submitted by four suppliers. She was evaluating the quotes based on price, target quality levels, and delivery lead time promises. As she was working, her manager, Dave Cox, entered her office. He asked how everything was progressing and if she needed any help. She mentioned she was reviewing quotations from suppliers for a tooling contract. Dave asked who the interested suppliers were and if she had made a decision. Sharon indicated that one supplier, Apex, appeared to fit exactly the requirements Visionex had specified in the proposal. Dave told her to keep up the good work. Later that day Dave again visited Sharons office. He stated that he had done some research on the suppliers and felt that another supplier, Micron, appeared to have the best track record with Visionex. He pointed out that Sharons first choice was a new supplier to Visionex and there was some risk involved with that choice. Dave indicated that it would please him greatly if she selected Micron for the contract. The next day Sharon was having lunch with another buyer, Mark Smith. She mentioned the conversation with Dave and said she honestly felt that Apex was the best choice. When Mark asked Sharon who Dave preferred, she answered, Micron. At that point Mark rolled his eyes and shook his head. Sharon asked what the body language was all about. Mark replied, Look, I know youre new but you should know this. I heard last week that Daves brother-in-law is a new part owner of Micron. I was wondering how soon it would be before he started steering business to that company. He is not the straightest character. Sharon was shocked. After a few moments, she announced that her original choice was still the best selection. At that point Mark reminded Sharon that she was replacing a terminated buyer who did not go along with one of Daves previous preferred suppliers. Ethical decisions that affect a buyers ethical perspective usually involve the organizational environment, cultural environment, personal environment, and industry environment. Analyze this scenario using these four variables.
Scenario 4 Sharon Gillespie, a new buyer at Visionex, Inc., was reviewing quotations for a tooling contract submitted by four suppliers. She was evaluating the quotes based on price, target quality levels, and delivery lead time promises. As she was working, her manager, Dave Cox, entered her office. He asked how everything was progressing and if she needed any help. She mentioned she was reviewing quotations from suppliers for a tooling contract. Dave asked who the interested suppliers were and if she had made a decision. Sharon indicated that one supplier, Apex, appeared to fit exactly the requirements Visionex had specified in the proposal. Dave told her to keep up the good work. Later that day Dave again visited Sharons office. He stated that he had done some research on the suppliers and felt that another supplier, Micron, appeared to have the best track record with Visionex. He pointed out that Sharons first choice was a new supplier to Visionex and there was some risk involved with that choice. Dave indicated that it would please him greatly if she selected Micron for the contract. The next day Sharon was having lunch with another buyer, Mark Smith. She mentioned the conversation with Dave and said she honestly felt that Apex was the best choice. When Mark asked Sharon who Dave preferred, she answered, Micron. At that point Mark rolled his eyes and shook his head. Sharon asked what the body language was all about. Mark replied, Look, I know youre new but you should know this. I heard last week that Daves brother-in-law is a new part owner of Micron. I was wondering how soon it would be before he started steering business to that company. He is not the straightest character. Sharon was shocked. After a few moments, she announced that her original choice was still the best selection. At that point Mark reminded Sharon that she was replacing a terminated buyer who did not go along with one of Daves previous preferred suppliers. What should Sharon do in this situation?
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