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Find Related Questions by Tags, levels, etc.
Jodoo Company Ltd had a new, large order for its product and thinks this may herald an expansion of the market and thus its sales and profits. Jodoo Ltd could move the factory to a new and larger site (cost: GHS 1 million), expand the existing factory (cost: GHS 0.25 million), or meet the new order by overtime (cost: GHS 0.08 million).
Three likely sales increase scenarios were proposed:
The expected profits under each option are:
| Sales Increase % | New Factory (GHS million) | Expanded Factory (GHS million) | Overtime (GHS million) |
|---|---|---|---|
| 40% | 6 | 3.5 | 1.5 |
| 10% | 2.5 | 2.5 | 1.5 |
| 0% | 0 | 0 | 0 |
Required:
(i) Construct a decision tree to represent the various scenarios of expansion. (6 Marks)
(ii) Calculate the expected monetary value (EMV) of each node of your tree. (8 Marks)
(iii) Advise the company on how to react to this opportunity. (6 Marks)
Find Related Questions by Tags, levels, etc.
Jodoo Company Ltd had a new, large order for its product and thinks this may herald an expansion of the market and thus its sales and profits. Jodoo Ltd could move the factory to a new and larger site (cost: GHS 1 million), expand the existing factory (cost: GHS 0.25 million), or meet the new order by overtime (cost: GHS 0.08 million).
Three likely sales increase scenarios were proposed:
The expected profits under each option are:
| Sales Increase % | New Factory (GHS million) | Expanded Factory (GHS million) | Overtime (GHS million) |
|---|---|---|---|
| 40% | 6 | 3.5 | 1.5 |
| 10% | 2.5 | 2.5 | 1.5 |
| 0% | 0 | 0 | 0 |
Required:
(i) Construct a decision tree to represent the various scenarios of expansion. (6 Marks)
(ii) Calculate the expected monetary value (EMV) of each node of your tree. (8 Marks)
(iii) Advise the company on how to react to this opportunity. (6 Marks)
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
Jodoo Company Ltd had a new, large order for its product and thinks this may herald an expansion of the market and thus its sales and profits. Jodoo Ltd could move the factory to a new and larger site (cost: GHS 1 million), expand the existing factory (cost: GHS 0.25 million), or meet the new order by overtime (cost: GHS 0.08 million).
Three likely sales increase scenarios were proposed:
The expected profits under each option are:
| Sales Increase % | New Factory (GHS million) | Expanded Factory (GHS million) | Overtime (GHS million) |
|---|---|---|---|
| 40% | 6 | 3.5 | 1.5 |
| 10% | 2.5 | 2.5 | 1.5 |
| 0% | 0 | 0 | 0 |
Required:
(i) Construct a decision tree to represent the various scenarios of expansion. (6 Marks)
(ii) Calculate the expected monetary value (EMV) of each node of your tree. (8 Marks)
(iii) Advise the company on how to react to this opportunity. (6 Marks)
Find Related Questions by Tags, levels, etc.
Jodoo Company Ltd had a new, large order for its product and thinks this may herald an expansion of the market and thus its sales and profits. Jodoo Ltd could move the factory to a new and larger site (cost: GHS 1 million), expand the existing factory (cost: GHS 0.25 million), or meet the new order by overtime (cost: GHS 0.08 million).
Three likely sales increase scenarios were proposed:
The expected profits under each option are:
| Sales Increase % | New Factory (GHS million) | Expanded Factory (GHS million) | Overtime (GHS million) |
|---|---|---|---|
| 40% | 6 | 3.5 | 1.5 |
| 10% | 2.5 | 2.5 | 1.5 |
| 0% | 0 | 0 | 0 |
Required:
(i) Construct a decision tree to represent the various scenarios of expansion. (6 Marks)
(ii) Calculate the expected monetary value (EMV) of each node of your tree. (8 Marks)
(iii) Advise the company on how to react to this opportunity. (6 Marks)
Find Related Questions by Tags, levels, etc.
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