Description
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 (Attached below for both Case Study and Excel Data Sets).
Write a 1,050-1,155-word report based on the Bell Computer Company Forecasts data set and Case Study Scenarios.(Both attached below; for word report my professor is very strict on keeping it within word count and will take off points if it goes over 10% or under, in other words keep it within 1,050-1,155 words exactly, excluding cover page and references).
Include answers to the following:
Introduction
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? (Please show how calculated in Excel and explain computations in word document report).
- 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? (Please show how calculated in Excel and explain computations in word document report).
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? Explain
Conclusion
Format your assignment consistent with APA format, include APA citations. No Plagiarism
Use direct web link site sources for references.
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Explanation & Answer
Attached.
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=
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=
Attached.
Running head: Bell Computer Company
1
Bell Computer Company
Tutor
Institution
Name
Date
Bell Computer Company
2
Case 1; Bell Computer Company
The bell computer company has two expansion choices which are large scale and
medium scale. It both choices, the company can experience low, medium or high demand having
the probability of 0.2, 0.5 and 0.3 for the three cases. Medium scale expansion has $50,000,
$150,000 and $200,000 profit...