1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Andreyy89
2 years ago
11

Suppose a manufacturing plant is considering three options for expansion. The first one is to expand into a new plant (large), t

he second to add on third-shift to the daily schedule (medium) and the third to do nothing (small). There are three possibilities for demand. These are high, medium, and low with the probability of .5 (H), .25 (M), .25 (L) of occurring. Suppose that the profits for the expansion plans are as follows (respective to high, medium, low demand). The large expansion profits are $100000, $10000,-$10000, the medium expansion choice $40000, $40000, $5000 and the small expansion choice $15000, $15000, $15000. a. What is the highest EMV? b. What is EVwPI?c. What is the organization willing to pay for perfect information?d. Which of the expansion plans should the manager choose?
Business
2 answers:
mr_godi [17]2 years ago
7 0

Answer:

1a $50000

1b is the price that an individual is willing to pay to get perfect information

1c $35125

1d Choose large expansion

Explanation:

Large expansion

(0.5×100000)+(0.25×100000)+(0.25×-100000)

=$50000

Medium expansion

(0.5×40000)+(0.25×40000)+(0.25×5000)

=$31250

Small Expansion

(0.5×15)+(0.25×15000)+(0.25×15000)

=$15000

EMV= $500000

       

1b EPwPI is the price that a and individula is willing to pay to get perfect information

1c

Large expansion

(0.5×10000)+(0.25×40000)+(0.25×15000)

=$18750

Medium expansion

(0.5×10000)+(0.25×40000)+(0.25×15000)

=$18750

Small Expansion

(0.5×-10000)+(0.25×5000)+(0.25×15000)

=$-1125

EV= $18750+$18750-1125

        =$36375

EPwPI = 50000- 36375

            =$35125

1d They should choose large expansion as it has the highest expected return.

sp2606 [1]2 years ago
4 0

Answer:

a. $50,000

b. $77,500

c. $27,500

d. Large expansion or plant

Explanation:

a. What is the highest Expected Monetary Value (EMV)?

1. EMV of Large expansion = ($100000×0.50) + ($10000×0.25) + (-$10000×0.25)

EMV of Large expansion =

2. EMV of Medium expansion = ($40000×0.50) + ($40000×0.25) + ($5000×0.25)

EMV of Medium expansion = $31,250

3. EMV of Small expansion = ($15000×0.50) + ($15000×0.25) + ($15000×0.25)

EMV of Small expansion = $15,000

The highest EMV is $50,000 which is the EMV of Large expansion.

b. What is Expected Value with Perfect Information (EVwPI)?

EVwPI is obtained by adding together the expected value of the highest profit from each of the expansions as follows:

EVwPI = ($100000×0.50) + ($40000×0.50) + ($15000×0.50)

EVwPI = $77,500

c. What is the organization willing to pay for perfect information?

This requires the calculation of Expected Value of Perfect Information (EVPI). This can be obtained as follows:

EVPI = EVwPI - EVwoPI

Where EVwoPI denotes Expected Value without Perfect Information and it is is the highest EMV of $50,000 which is the EMV of Large expansion obtained in a above.

Substituting the figures, we have:

EVPI = $77,500 - $50,000 = $27,500

d. Which of the expansion plans should the manager choose?

The manager should choose the large expansion because it has the highest or maximum EMV of $50,000.

You might be interested in
Which are major situational considerations or variables in determining whether or not to involve a group in the decision-making
Oksana_A [137]

Answer:

The correct answer will be Option B "Organizational complexity ".

Explanation:

  • A Complex organization does indeed have a broader organizational structure or even more personnel in each group, mission, or team.
  • Complexity can sometimes be susceptible to multiple actors, various organizational structures, as well as different service will be produced that would need to be implemented.

The other given choices are not related to the given scenario. So that the above would be the appropriate choice.

5 0
2 years ago
Which of the following statement(s) is(are) true regarding the selection of a portfolio from those that lie on the capital alloc
Mice21 [21]

Answer:II) More risk-averse investors will invest less in the optimal risky portfolio and more in the risk-free security than less risk-averse investors. III) Investors choose the portfolio that maximizes their expected utility.

Explanation:The capital allocation line is a line created in a graph by investors in an economy to display or identify the potential risks involved in taking risky decisions. This line is one the determining factors to ensure that the investor has adequate knowledge about the risky nature of a capital investment.

Investors generally choose portfolios that guarantee maximum profits with reduced chances of loss. More risk averse investor will choose or opt for less risky portfolio.

4 0
2 years ago
What does it mean to provide customer service? PLEASE HELP
stepan [7]

Answer:

Providing excellent customer service means going the extra mile in making sure a customer is happy and satisfied with a company's products or services. It also involves providing service to a customer in a timely, pleasant manner.

8 0
2 years ago
What is the origin of the term “to post” advertisements?
OlgaM077 [116]
The answer is A "Colonial merchants once nailed advertisements on posts in front of their stores." please marl me as brainliest
4 0
3 years ago
Read 2 more answers
A proposed new investment has projected sales of $557,000. Variable costs are 39 percent of sales, and fixed costs are $131,000;
Lana71 [14]

Answer

The answer and procedures of the exercise are attached in the following archives.

Explanation  

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.  

8 0
3 years ago
Other questions:
  • Waygate's residential internet modem works well but is sensitive to power-line fluctuations. On average, this product hangs up a
    6·1 answer
  • Merticao, a French textile company, supplied most of its products to its primary market in Hestonia, a North American nation. Ho
    7·1 answer
  • Tom, an experienced salesperson for road construction equipment, has been hired as the sales representative for Caterpillar Trac
    14·1 answer
  • Which of these career clusters sound most interesting to you? Check all that apply.
    14·1 answer
  • When Corey runs out of shampoo he buys whatever brand is on sale at his local CVS drugstore. What is his level of involvement in
    5·1 answer
  • An adjusting entry was made on year-end December 31 to accrue salary expense of $3,000. Assuming the company does not prepare re
    13·1 answer
  • The _____________ concept recognizes that organizations thrive from day to day by determining the current needs and wants of tar
    11·1 answer
  • A deed often used to clear up cloud on title is
    9·1 answer
  • 2. Why do many employers fail to adequately socialize or orient their new hires to the organization?
    5·1 answer
  • What capability of supergroup would be considered costly to imitate?
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!