A company is evaluating 3 different distribution plans for a new product. The company has developed best case (60% probability) and worst case (40% probability) estimates for each plan. Results are summarized in the table below. What is the optimal decision based on the maximum expected value criterion? Worst Best Plan 1 -2 10 Plan 2 3 6 Plan 3 4 5 Prob 0.4 0.6
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- The management of Brinkley Corporation is interested in using simulation to estimate the profit per unit for a new product. The selling price for the product will be $45 per unit. Probability distributions for the purchase cost, the labor cost, and the transportation cost are estimated as follows: Procurement Cost($) 10 $ 11 12 Probability 0.25 0.45 0.30 Labor Cost ($) 20 22 24 25 Probability 0.10 0.25 0.35 0.30 Transportation Cost ($) 3 5 (a) Compute profit per unit for the base-case, worst-case, and best-case scenarios. Base Case using most likely costs Profit = $ /unit Worst Case Profit = $ /unit Best Case Profit = $ /unit Probability 0.75 0.25 (b) Construct a simulation model to estimate the mean profit per unit. (Use at least 1,000 trials.) (c) Why is the simulation approach to risk analysis preferable to generating a variety of what-if scenarios? Simulation will provide ---Select--- of the profit per unit values which can then be used to find ---Select--- ◆ of an unacceptably low…PlsAnswer the first three question fully with your own knowledgeThe city of Brandberry has planned to reduce the arsenic in its water by 1 part per billion each year over the next 7 years. What do you expect will happen? Group of answer choices The cost and benefits to Brandberry will be lowest in the last few years of implementing this plan. The cost and benefits to Brandberry will be highest in the last few years of implementing this plan. The cost will be the highest and benefits the lowest in year seven.
- Fethe's Funny Hats is considering selling trademarked, orange-haired curly wigs for University of Tennessee football games. The purchase cost for a 2-year franchise to sell the wigs is $20,000. If demand is good (40% probability), then the net cash flows will be $27,000 per year for 2 years. If demand is bad (60% probability), then the net cash flows will be $9,000 per year for 2 years. Fethe's cost of capital is 14%. A. What is the expected NPV of the project? B. Use decision-tree analysis to calculate the expected NPV of this project, including the option to continue for an additional 2 years. B. Use decision-tree analysis to calculate the expected NPV of this project, including the option to continue for an additional 2 years.only a,b,c,or d option no explanation Three applicants are to be selected at random out of 4 boys and 6 girls. What is the probability of selecting, at least one girl? Answer Answer Option a) 0.5 b) 0.15 d) 0.366 c) 0.63610) a) What are the probability distributions for the annual benefit and life for the following project? The annual benefit's most likely value is $7000 with a probability of 60%. There is a 30% probability that it will be $4000, and the highest value that is likely $9,000. A life of 6 years is twice as likely as a life of 9 years. b) The project has a first cost of $25,000. The firm uses an interest rate of 8%. Assume that the probability distributions for annual benefit and life are unrelated or statistically independent. Calculate the probability distribution for the PW c) The first cost of the project is $25,000. Use the expected values for annual benefits and life to estimate the present worth. Use an interest rate of 8%. d) Use the probability distribution function of the PW to calculate the EV(PW). Does this indicate an attractive project? F) Using the probability distribution for the PW, calculate the PW's standard deviation.
- Solve this early all three subparts.Matrix below indicates PROFIT expected from 4 alternatives under 4 states of nature. Determine which alternative is dominant using With and Without Probability (use a = 0.3 and probability of: 30% 20%; 40% & 10% for S1, S2, S3, and 54 respectively): Wich alternative is best using minimax regret? Alternatives 53 S4 A1 A2 A3 A4 S1 10 12 15 13 S2 20 15 18 16 18 25 19 30 15 20 25 18A distribution company purchases two parts from the same supplier. When the company places an order there is a common procurement cost of $1750, in addition to $300 (Product I) and $100 (Product II) of individual procurement costs. Product I has a weekly demand of 500 units with a standard deviation of 50 units, Product I values $200, target CSL is 94%, and lead time is one month. Product II has a weekly demand of 60 units with a standard deviation of 15 units, each Product II values $1200, target CSL is 99%, and lead time is 3 months. The company uses 24% as the inventory holding rate per year (1 year is 52 weeks or 12 months) • Assuming each product is individually ordered using periodic review policy, compute T*, M*, and TC of Product I and II individually. . Assuming these products are jointly replenished, what will be the T*, M₁, M₁, TC? What is the amount of savings when products are jointly ordered compared to individual ordering?
- Data in the matrix below indicates COST expected from 3 alternatives under 4 states of nature. Determine which alternative is dominant using With and Without Probability (use a = 0.3 and probability of: 30%; 20%; 40% & 10% for S1, S2, S3, and 54 respectively): Which alternative is best using Expected Value? Alternatives S1 53 S4 A1 10 18 15 A2 12 25 20 A3 15 19 25 S2 20 15 18True or False: Heteroskedasticity biases our estimatesLast year, 18,00018,000 people died from a newly discovered disease. Pollution is one of the contributing factors. However, even if the level of pollution is reduced, it is estimated that about 5,5005,500 people will die annually from the disease. The estimated cost of a pollution-reduction project is $33.75$33.75 billion; before investing, the government wants to verify the project's value.Calculate the average cost of a life saved. Enter your answer in U.S. dollars in the box below and round to the nearest whole number if necessary.