3. The research department of the Allied Manufacturing Company has developed a new process that it believes will result in an improved product. Management must decide whether or not to go ahead and market the new product. The new product may be better than the old or it may not be better. If the new product is better and the company decides to market it, sales should increase by $120,000. If it is not better and they replace the old product with the new product on the market, they will lose $50,000 to competitors. If they decide not to market the new product they will lose $30,000 if it is better, and research costs of $20,000 if it is not. (a) Prepare a payoff matrix. (b) If management believes the probability that the new product is better to be .3, find the expected profits under each strategy and determine the best action.

Cecille Paper Company uses softwood and hardwood pulp as basic materials for producing converter-grade paper. Hardwood is 80% pulp fiber and 20% pulp binder, while softwood is 50% pulp fiber and 50% pulp binder. The cost per pound for hardwood and softwood is $.50 and $.40, respectively. The company s quality control expert specifies that in order for the product to meet quality standards, each batch must contain at least 12,000 pounds of pulp fiber and at least 6,000 pounds of pulp binder. Because of equipment limitations, the size of a batch cannot exceed 24,000 pounds. The Production Department recently received a new standard from the Cost Department, allowing $8,200 per batch. The production manager feels that this amount is too low, because such costs have never been less than $8,400. Required: Using the graphic method, determine the hardwood and softwood mix necessary to minimize the cost per batch.

The Vintage Restaurant, on Captiva Island near Fort Myers, Florida, is owned and operated by Karen Payne. The restaurant just completed its third year of operation. Since opening her restaurant, Karen has sought to establish a reputation for the Vintage as a high-quality dining establishment that specializes in fresh seafood. Through the efforts of Karen and her staff, her restaurant has become one of the best and fastest growing restaurants on the island. To better plan for future growth of the restaurant, Karen needs to develop a system that will enable her to forecast food and beverage sales by month for up to one year in advance. Table 17.25 shows the value of food and beverage sales ($1000s) for the first three years of operation.  Dependent variable: What is the variable: ___________________________________________ How it is measured, i.e. what units or categories are used (e.g., revenue measured in “dollars”; height measured as “short, average, tall”)…

1.You are choosing between two texting plans. Plan A has a monthly fee of $15 with a charge of $0.08 per text. Plan B has a monthly fee of $3 with a charge of $0.12 per text. How many text messages in a month make plan A the better deal.  2. You invested $8000 in two funds paying 2% and 5% investment exceeded the interest from the 5% investment exceeded the interest from the 2% investment by $85. How much money was invested at the rate 2%?

Store A and Store B compete for the business of the same customer base.  Store A has 55% of the business and Store B has 45 %. Both companies intend to expand to increasse their market share.  If both expand, or neither expand, they expect theri market share to remain the same.  If Store A expands and Store B does not, the Store A"A share increases to 65%.  If Store B expands and Store A  doesnt, then Store A's share drops to 50%.  Determine which strategy, to expand or not, each company should take.

XYZ Manufaturing company has hired a new VP (D.A.King) for managing capacity investment decisions.  Mr. King reviews the situation after he comes on board and decides that he can invest in Batch manufacturing, Custom manufacturing or Group technology.  Mr. King will not be able to forecast demand accurately till after the technology choices are made.  Demand will be classified into four scenarios:  poor, fair, good and excellent.  The table below indicates the payoffs for each combination of technology choice and demand scenario.      POOR FAIR GOOD EXCELLENT PROBABILITY 0.1 0.4 0.3 0.2 Batch - $200,000 $1,000,000 $1,200,000 $1,300,000 Custom $100,000 $300,000 $700,000 $800,000 Group Technology - $1,000,000 -$500,000 $500,000 $2,000,000 1.What is the expected monetary value of choosing the Group Technology option? 2.What is the expected monetary value of choosing the Batchoption?   3What is the BEST decision based on…

If Starbright Coffee Shop could get 1 more pound of coffee, which one should it be?What would be the effect on sales of getting 1 more pound of this coffee?• If the costs associated with increasing brewing capacity from 30 gallons to 40 gallonsper day come out to roughly $15 per day, would such a change be profitable?• If the shop spent $20 per day on advertising that would increase the relative demandfor Pomona to twice that of Coastal, should it be done?

Elaine Benes is considering three possible ways to invest the $200,000 she has just inherited. Some of Elaine’s friends are considering financing a combined laundromat, video-game arcade, and pizzeria, where the young singles in the area can meet and play while doing their laundry. This venture is highly risky and could result in either a major loss or a substantial gain within a year. Elaine estimates that the chances of losing all the money (i.e. loss of $200,000) are 47%, while the chances of making a $200,000 profit are 53%. Elaine can invest in some new apartments that are being built in town. Within 1 year, this fairly conservative project will produce a profit of at least $10,000, but it might yield $20,000 or even $30,000. Elaine estimates the probabilities of these yields at 20%, 50%, and 30% respectively. Elaine can invest in some private securities that have a current yield of 5%.  Construct (draw) a decision tree for Elaine to determine which investment will maximize her…

Suppose you are the marketing manager of a firm, and you plan to introduce a new product to the market. You have to estimate the first year net profit, which depends on several variables • Sales volume (in units) • Price per unit • Unit cost . Fixed costs Your net profit is net profit = sales volume x (price per unit-unit cost) - fixed cost The fixed cost is $120, 000, but other factors have some uncertainty. Based on your market research, there are equal chance that the market will be slow, ok, or hot. • Slow market the sales volume follows Poisson distribution with mean 50,000 units product, and the average price per unit is $11.00 ● Ok market the sales volume follows Poisson distribution with mean 75,000 units product, the average price per unit is $10.00 Hot market: the sales volume follows Poisson distribution with mean 100,000 units product, but the competition is severe so you expect the average price per unit is just $8.00 No matter what the market type is, your average unit…

From the data given compute the sales price for each product T and O. From the data given compute variable cost per unit for each product T and O.   Letter Co. produces and sells two products, T and O. It manufactures these products in separate factories and markets them through different channels. They have no shared costs. This year, the company sold 50,000 units of each product. Sales and costs for each product follow.