A company is deciding if it should design a product in-house or outsource the design. If outsourced, the costfor a low bidder would be $30,894, and the cost for an expensive bidder would be $99,781. To design in-house would require overtime for an already stretched design team with total costs of $59,664. If all threedesigns (in-house, low bid, high bid) are equal in quality and the likelihood of finding a low bidder is 60%(meaning that 40% of the time the firm will have to hire the expensive bidder). What is the expectedmonetary value (EMV) should the company outsource design?

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Answered: A company is deciding if it should…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Consider the following decision tree. Which decision, A or B, is best? What is the expected value of this decision? .40 $3,000 A B 2 .20 .80 OA, expected payoff = $2,000 OA, expected payoff = $2,120 OB, expected payoff = $1,800 OA, expected payoff = $2,100 .60 -$1,000 $2,500 $2,000 $1,800
You are the training manager for a manufacturing company which is opening a new branch in a distant location. You need to arrange induction training for all new employees in this location. You can either provide this training in house, or outsource it to a third party. You have received a quote from a sub-contractor for £108,000 to provide the training and been given the following information about the cost of providing the training in house: Internal team requirements: Team leader salary 45,000 2 x team staff with expected salary each of 25,000 Additional overhead costs per person 1,200 Share of central overheads allocated to training dept 2,500 In addition you will need to hire temporary staff at £600 per week to cover staff holidays. Staff are entitled to four weeks holiday each per year. If you cannot find suitable staff internally, you may have to incur recruitment fees of £1,500 per person. Should the training be outsourced and why? What other considerations should be taken…
Salomon Alpine, Inc., wants to enter the market quickly with a new finish on its ski boards. It has three choices: (a) refurbish the old equipment at a cost of $10,000; (b) make major modifications at a cost of $13,000; or (c) purchase new equipment at a cost of $20,000. If the firm chooses to refurbish the equipment, materials and labor will be $12 per board. If it chooses to make modifications, materials and labor will be $8 per board. If it buys new equipment, materials and labor will be $4 per board. Which option should the firm choose if it thinks it can sell 1400 boards at a price of $50 apiece? alternative a (refurbish) alternative c (new equipment) alternative b (major modification) None of the above
With major renovation, the company’s payoff from a favorable market is $100,000, from an unfavorable market, $ -90,000. Minor renovation and favorable market has a payoff of $40,000 and an unfavorable market, $-20,000. Not developing the new product line effectively has $0 payoff. What is the expected value of doing MAJOR RENOVATION?
As you design the framework, define potential issues and assess potential roadblocks as you apply your solutions. Yes or no. Is this important or unimportant?
Howard Weiss, Inc., is considering building a sensitive new radiation scanning device. His managers believe that there is aprobability of .35 that the ATR Co. will come out with a competitive product. If Weiss adds an assembly line for the product and ATR Co. does not follow with a competitive product, Weiss's expected profit is $40,000 ; if Weiss adds an assembly line and ATR follows suit, Weiss still expects $20,000 profit. If Weiss adds a new plant addition and ATR does not produce a competitive product, Weiss expects a profit of $600,000 ; if ATR does compete for this market, Weiss expects a loss of $120,000.Part 2a) Expected value for the option = $ b)Expected value for the build new plant option = c) The alternative that provides Weiss the…
A dependent project is one whose acceptance or rejection is based on: (a) Its rate of return with respect to the MARR (b) The amount of capital available for investment (c) A decision about another project (d) The amount receivable in salvage value of the existing asset
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TRUE OR FALSE 4) Cost plus fixed profit encourages contractors to finish work slowly. 5) On average, design consumes about 10% of total construction project cost.
A local council/Baldiya issued a tender request for the construction of a small community center. Mr. Shoaib who owned a small construction firm applied for the tender. However, the local council rejected his proposal on the basis that his firm size is too small and hence it is less likely that his firm will complete construction in the agreed time, cost, and quality. Based on this information, which of the disadvantage of the small business is highlighted in this example? a. Lack of proper planning b. All the options are correct c. Less availability of capital d. Lack of skilled human resource
Provide a circumstance under which the expected monetary value is appropriate for decision making.
b. What is the expected value for the rezoned apartments, if the rezoning cost is included (but land cost is excluded)? Note: Do not round your intermediate calculations. Enter your answers in millions rounded to 2 decimal places. Negative amounts should be indicated by a minus sign. Expected value million c. If the land is rezoned, what should the contractor decide? O Build shopping center O Build apartments d. What is the expected revenue, if the land is not rezoned (excluding the land cost)? Note: Do not round your intermediate calculations. Enter your answers in millions rounded to 2 decimal places. Negative amounts should be indicated by a minus sign. Expected revenue million e. What is the expected net profit of entire project, including all applicable costs? Note: Do not round your intermediate calculations. Enter your answers in millions rounded to 2 decimal places. Negative amounts should be indicated by a minus sign. Expected net profit million

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