Exam 16: Decision Making

Use the following to answer the questions below. A proposal for implementing a new product line has an annual fixed cost of $60,000,variable cost of $35 per unit of output,and revenue (selling price)of $55 per unit of output. -Refer to the instruction above.What is the break-even quantity?

If the payoff table contains expenses instead of revenues,then the optimistic criterion is Minimin.

Fixed cost is the portion of the total cost that remains constant regardless of changes in levels of output.

Provide an example of two or more events where you as a decision maker would truly be engaged in decision making under uncertainty.Why are you incapable of deciding which event is more likely than the other(s)?

Table A.1 Use the following to answer the questions below. A couple planning a vacation needs to choose between four different modes of transportation as shown in the table.Depending on the weather,either excellent,normal,or bad,they have estimated their daily comfort expenses. -Which alternative in Table A.1 performs best under the minimax regret criterion?

Minor Video has opened a new store renting videocassettes.Fixed costs are $60,000,and the variable cost per unit is $1.50.The average sale is $5 per customer.Use the following axes to determine the break-even quantity graphically.Next,refine your solution by solving it algebraically.(Show your work for credit. )

Analyze the following decision tree.After determining the missing probabilities,identify which alternative (Option 1 or Option 2)has the higher expected payoff.What is the expected payoff?

Use the following information to answer the questions below. You currently make a part for old equipment at a cost of $20 / unit.The annual fixed cost for this equipment is $50,000.You have found an outside supplier who will make the part for $15 / unit if you will pay their annual fixed costs of $200,000 / year (see table). -Refer to the instruction above.What is the break even quantity between buying and making?

Use this scenario to answer the following questions. A company must decide if it will make or buy an item it needs.The company can make the item for $10 per unit,but must invest $15,000 in tooling to achieve that capability.Alex Rogo has quoted a total price of $12 per unit to supply the quantity required (assume their fixed costs are included in the quoted price). -Refer to the instruction above.What does the company save for the year by selecting this low-cost option (for annual requirements of 5,000 units)?

The ________ nodes have probabilities associated with them in a decision tree.

Use the following to answer the questions below. A company is considering two suppliers for the purchase of a part needed for manufacturing.Particulars are as follows: -Refer to the instruction above.What does the company save for the year by selecting this low-cost option (for annual requirements of 3,000 units)?

The Laplace criterion will reach the same decision as the Minimax Regret criterion when the payoff table contains expenses instead of revenues.

A manufacturing firm is considering an entirely new product that will require additional capital equipment,training,and an addition to their existing facility that will cost $50,000 per year.The projected retail price is $45 per unit,and the variable cost of production is $12.50.What is the break-even for this product? Solve using both the graphical and algebraic approaches.

Use the following information to answer the questions below. You currently make a part for old equipment at a cost of $20 / unit.The annual fixed cost for this equipment is $50,000.You have found an outside supplier who will make the part for $15 / unit if you will pay their annual fixed costs of $200,000 / year (see table). -Refer to the instruction above.What are total costs to make a quantity of 40,000 units per year?

Use the following to answer the questions below. A proposal for implementing a new product line has an annual fixed cost of $60,000,variable cost of $35 per unit of output,and revenue (selling price)of $55 per unit of output. -Refer to the instruction above.What selling price would be necessary to generate an annual profit of $90,000,if expected volume is 6,000 units per year (assume fixed costs remain at $60,000,and variable cost per unit at $35)?

The ________ is the volume at which total revenues equal total costs.

List and describe decision rules that are used for decision making under uncertainty.

Use the following to answer the beekeeping questions below. A math major turned hipster-beekeeper has determined that his profit is governed by the equation 5x - 40,where x represents the number of hives he sets up for the honey season. -In the hipster-beekeeper's equation,5 represents the:

An analyst that can't assign probabilities to the events must be engaged in decision-making under ________.

When using decision tree analysis: