Expansion strategy and establishing a re order point, homework help

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Write a 1,050-word report based on the Bell Computer Company Forecasts data set and Case Study Scenarios.

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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.

Use consistent number of decimals for types of numbers displayed. Provide units for numbers when appropriate. Construct data comparison tables when appropriate. Display data in a helpful, informative, and accessible manner. (Worry about the expression, "If you look good, you do good.")

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Low Demand Medium High Expected Profit ($1000s) 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% 145 140 Risk Analysis for Medium-Scale Expansion Annual Profit (x) Probability P(x) (x - µ)2 (x - µ)2 * P(x) Demand $1000s x*P(x) (x - µ) Low 50 20% 10 -95 9025 1805 Medium 150 50% 75 5 25 12,5 High 200 30% 60 55 3025 907,5 2 σ = mean= 145 2725 σ = 52,2015 Risk Analysis for Large-Scale Expansion Annual Profit (x) Probability P(x) (x - µ)2 (x - µ)2 * P(x) Demand $1000s x*P(x) (x - µ) Low 0 20% 0 -140 19600 3920 Medium 100 50% 50 -40 1600 800 High 300 30% 90 160 25600 7680 2 σ = mean= 140 12400 σ = 111,355
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Running head: EXPANSION STRATEGY AND REORDER POINT

Expansion Strategy and Reorder Point
Name
University of Phoenix
QNT/561
July 17, 2017

1

EXPANSION STRATEGY AND REORDER POINT

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Bell Computer Company
Bell Computer Company has two options which it could utilize during its expansion
namely large scale and medium scale. The demand in each case could be low, medium or
high. The probability of low demand is 0.2 with 0.5 probability of medium demand and the
probability of high demand is 0.3.The respective profit for the medium scale expansion for
low, medium and high demand are $50,000,$150,000 and $200,00.Also,the annual profit for
the low, high and medium demand are $0,$100,000 and $300,000 respectively. The Bell
computer company is considering whether to opt for either medium scale expansion or to
have large scale expansion strategy.
The report seeks to provide the expansion strategy the company must follow in order
to have maximum profit and lower risk of loss. The decision strategy is based on the mean
and variation of the annual profit of the company. The mean is defined as the average value
of all the observation whereas the standard deviation is the average deviation from the mean.
The large scale enterprise could produce the highest profits when demands are high
and generate nothing when demands are low. The medium scale enterprise would produce
profits even at low demand, while the large-scale expansion produces no profits under low
demands. It’s notable that the large...