10-2 Scenario Analysis: Printing Equipment

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timer Asked: Jun 30th, 2018
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Instructions

The owner of a small printing company is considering the purchase of additional printing equipment to expand her business. If the owner expands the business and sales are high, projected profits (minus the cost of the equipment) should be $90,000; if sales are low, projected profits should be $40,000. If the equipment is not purchased, projected profits should be $70,000 if sales are high and $50,000 if sales are low.

  1. Are there options other than the purchase of additional equipment that should be considered in making the decision to expand the business?
  2. If the owner is optimistic about the company's future sales, should the company expand by purchasing the equipment?
  3. Is the owner's optimism or pessimism about sales the only factor that may impact the company's profits?
  4. The equipment to be purchased is known in the industry to have a useful life of five years. How might this impact the printing company?

For additional details, please refer to the Scenario Analysis Guidelines and Rubric document.

QSO 510 Scenario Analysis Guidelines and Rubric Knowledge of statistics is important foundational knowledge for analyzing data. Equally important is what you can do with that information. An overarching goal of this course is to consider how statistics informs decision making, or data-based decision making. Throughout this course, you will be asked to make decisions and then to consider the impact of those choices. Whether in stock trading, in car sales, or on the production floor, the decisions you make as a business professional should be directly influenced by the data available to you. Careful analysis is the key to data-based decision making. Each module task below provides a scenario and a list of questions for you to answer using data-based decision making.       Module Two: Stock Options Module Four: Cars Sold Module Five: Computer Chips Module Six: Vacation Time Module Eight: Promotion Module Ten: Printing Equipment Specifically, the following critical elements must be addressed: I. II. III. IV. Main Elements Integration and Application Analysis Critical Thinking Guidelines for Submission: Your analysis of the scenario must be submitted as a 1- to 2-page Microsoft Word document with double spacing and 12-point Times New Roman font. Rubric Critical Elements Main Elements Integration and Application Analysis Critical Thinking Articulation of Response Exemplary (100%) Thoroughly addresses each of the main elements found in the individual prompts and guiding questions for each scenario All of the course concepts are correctly applied Meets “Proficient” and the quality of the statistical analysis is above minimum quality standards for competent Draws insightful conclusions that are thoroughly defended with peer-reviewed evidence and examples Proficient (90%) Adequately addresses all of the main elements found in the individual prompts and guiding questions for each scenario Most of the course concepts are correctly applied Represents competency with respect to the statistical analysis Needs Improvement (70%) Addresses most but not all of the main elements found in the individual prompts and guiding questions for scenario Some of the course concepts are correctly applied Statistical analysis is evident, but does not meet standards Not Evident (0%) Addresses less than half of the main elements found in the individual prompts or guiding questions for each scenario Does not correctly apply any of the course concepts Statistical analysis is not evident Value 20 Draws informed conclusions that are justified with evidence based on peer-reviewed research Draws logical conclusions, but does not defend with evidence based on peer-reviewed research Does not draw logical conclusions 10 Submission is free of errors related to citations, grammar, spelling, syntax, and organization and is presented in a professional and easy to read format Submission has no major errors related to citations, grammar, spelling, syntax, or organization Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas Earned Total 10 20 40 100%

Tutor Answer

Tutor_Booth
School: Boston College

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Printing company

Yes, there are other options that the business management could consider in making the
expansion decision such the leasing the equipment, outsourcing some of its operations, and/or
increasing the quality its products in order to increase the demand and the market share (Bierman
Jr and Smidt). Notably, the purchase of new equipment would give the company the capabilities
to increase production. This does not necessary imply that sales will im...

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