Description
Expansion Strategy and Establishing a Re-Order Point
Purpose of Assignment
This assignment has two cases. The first case is on expansion strategy. Managers constantly have to make decisions under uncertainty. This assignment gives students an opportunity to use the mean and standard deviation of probability distributions to make a decision on expansion strategy. The second case is on determining at which point a manager should re-order a printer so he or she doesn't run out-of-stock. The second case uses normal distribution. The first case demonstrates application of statistics in finance and the second case demonstrates application of statistics in operations management.
Assignment Steps
Resources: Microsoft Excel®, Bell Computer Company Forecasts data set, Case Study Scenarios
Write a 1,050-word report based on the Bell Computer Company Forecasts data set and Case Study Scenarios.
Include answers to the following:
Case 1: Bell Computer Company
- Compute the expected value for the profit associated with the two expansion alternatives. Which decision is preferred for the objective of maximizing the expected profit?
- Compute the variation for the profit associated with the two expansion alternatives. Which decision is preferred for the objective of minimizing the risk or uncertainty?
Case 2: Kyle Bits and Bytes
- What should be the re-order point? How many HP laser printers should he have in stock when he re-orders from the manufacturer?
Format your assignment consistent with APA format.
Explanation & Answer
Attached.
Running Head: EXPANSION STRATEGY
1
Expansion Strategy
Name
Course
Tutor
Date
EXPANSION STRATEGY
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Case 1: Bell Computer Company
The Bell Computer Company has two development choices: medium scale, and
expansive scale. For both medium scale extension and substantial scale development, request can
be low, medium, or high with likelihood of 0.2, 0.5, and 0.3 individually. For medium scale
development, benefits if there should arise an occurrence of low; medium and appeal are
$50,000, $150,000 and $200,000 individually. For substantial scale extension, benefits if there
should be an occurrence of low, medium, and appeal are $0, $100,000 and $300,000
individually. Administration is facing predicament whether to go for medium scale extension or
huge scale development. While substantial scale development can possibly produce higher
benefit if there should arise an occurrence of appeal, the vast scale extension will create bring
down benefit than medium scale extension in the event of low and medium request. If there
should arise an occurrence of low request, the extensive scale development brings about nil
benefit. Unmistakably, extensive scale development bears more hazard than the low-scale
extension.
The normal esteem is a foreseen estimation of an activity. An activity has different
conceivable results. To start with, we have to decide likelihood of event of every result. The
normal esteem is ascertained by duplicating every conceivable result by likelihood of event of
that result, and including each one of those qualities (Hossein, 2014). Expected estimation of
medium scale extension and vast scale development will help the administratio...
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