The supplement to Chapter 5 in your textbook
1- describes and develops several decision trees.
2- develop a decision tree for the case described.
3- Explain the process of developing a decision tree,
4- draw the decision tree (include the decision tree in an appendix showing chance nodes, probabilities, outcomes, expected values, and net expected value),
5- defend your final decision based on your decision tree.
Case for consideration—An operations manager for a cereal producer is faced
13 Sep 2019 14:31
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13 Sep 2019 14:30
Module 6
Critical Thinking: Decision Tree
Decision Tree
The supplement to Chapter 5 in your textbook
1- describes and develops several decision trees.
2- develop a decision tree for the case described.
3- Explain the process of developing a decision tree,
4- draw the decision tree (include the decision tree in an appendix showing chance nodes, probabilities, outcomes, expected values, and net expected value),
5- defend your final decision based on your decision tree.
Case for consideration—An operations manager for a cereal producer is faced with a choice of:
a. A large-scale investment (A) to purchase a new cooker which could produce a substantial pay-off in terms of increased revenue net of costs but requires an investment of 3,750,000 Saudi
Riyal. After extensive market research it is thought that there is a 40% chance that a pay-off of 9,375,000 Saudi Riyal will be realized, but there is a 60% chance that it will be only 3,000,000 Saudi Riyal.
b. A smaller scale project (B) to refurbish an existing cooker. At 1,875,000 Saudi Riyal, this option is less costly but produces a lower pay-off. Again, extensive research data suggests a 30% chance of a gain of 3,750,000 Saudi Riyal but a 70% chance of it being only 1,875,000 Saudi Riyal.
c. Continuing the present operation without change (C) which cost nothing, but produces no pay-off.
note:
PLEASE you must use the text book ( chapter 4) as one source
THE TEXT BOOK IS :
Stevenson, W. (2018). Operations management (13th ed.). New York, NY: McGraw-Hill Irwin. ISBN-13: 9781259667473
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NOTE 2 :
please use the sources which are those published within the most recent five-year period, please