# Purpose of Assignment, Strategy and Establishing a Re-Order Point, assignment help

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Question description

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.

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.

References and intext citation minimum 2

Submit 2 files

1. word document showing all the work done and the minimum 1,050-word report

2. Excel file showing all the calculations, graphs and numbers

NOTE: Attached files are the needed resources to start this assignemnt follow all of them

Case Study – Week 3 Individual Assignment QNT/561 Version 9 Case Study – Bell Computer Company The Bell Computer Company is considering a plant expansion enabling the company to begin production of a new computer product. You have obtained your MBA from the University of Phoenix and, as a vicepresident, you must determine whether to make the expansion a medium- or large- scale project. The demand for the new product involves an uncertainty, which for planning purposes may be low demand, medium demand, or high demand. The probability estimates for the demands are 0.20, 0.50, and 0.30, respectively. Case Study – Kyle Bits and Bytes Kyle Bits and Bytes, a retailer of computing products sells a variety of computer-related products. One of Kyle’s most popular products is an HP laser printer. The average weekly demand is 200 units. Lead time (lead time is defined as the amount of time between when the order is placed and when it is delivered) for a new order from the manufacturer to arrive is one week. If the demand for printers were constant, the retailer would re-order when there were exactly 200 printers in inventory. However, Kyle learned demand is a random variable in his Operations Management class. An analysis of previous weeks reveals the weekly demand standard deviation is 30. Kyle knows if a customer wants to buy an HP laser printer but he has none available, he will lose that sale, plus possibly additional sales. He wants the probability of running short (stock-out) in any week to be no more than 6%. 1
Low Demand Medium High Medium-Scale Large-Scale Expansion Profits Expansion Profits Annual Annual Profit Profit (\$1000s) (\$1000s) P(x) P(x) 50 20% 0 20% 150 50% 100 50% 200 30% 300 30% Expected Profit (\$1000s) Risk Analysis for Medium-Scale Expansion Annual Profit (x) Probability P(x) (x - µ)2 (x - µ)2 * P(x) Demand \$1000s (x - µ) Low 50 20% Medium 150 50% High 200 30% σ2 = σ= Risk Analysis for Large-Scale Expansion Annual Profit (x) Probability P(x) (x - µ)2 (x - µ)2 * P(x) Demand \$1000s (x - µ) Low 0 20% Medium 100 50% High 300 30% σ2 = σ=
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ANNEPROFESSOR
School: UIUC

Attached.

1

Case Study
Institutional Affiliation
Date

CASE STUDY

2

Case 1: Bell Computer Company
The bell computer company has only two options of carrying out the expansion. The two options
are the large scale and the medium scale. With the use of the options of expansion, the medium
scale expansion, and the large-scale expansion, the demands can either be high, medium or low
depending on the probability of 0.3, 0.5 and 0.2 respectively (Keeney, & Raiffa, 1993).
In the option of medium scale expansion, the profits may exist as follows in case of high,
medium and low demand, \$200,000, \$150,000 and \$50,000 respectively. For the option of largescale expansion, the profits may appear as follows in case of high, medium and low, \$300,000,
\$100,000 and \$0 respectively.
The current management is facing a tricky dilemma of whether to use the large-scale expansion
or medium scale expansion. The large-scale expansion has a high potential of generating a higher
amount of profits in case of experiencing a high demand. The large-scale expansion will thus
generate a lower profit than the medium scale expansion when in the case of low and medium
demand. During the low demand, the large-scale expansion will give out an output result in nil
profit. In this case, it’s clear that the large-scale expansion gets under a high risk of the low scale
expansion. The anticipated action value is thus the expected value in the case. Generally, various
possible outcomes come as a result of an action. In this case to every action, we thus need to
determine the main probability of occurrence for every outcome got from the action (Keeney, &
Raiffa, 1993).
The value expected is thus calculated by using finding the product of every possible outcome
with their probability of occurrence and adding the all the values respectively so as t...

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Anonymous
Thanks, good work

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