case study

 

Data-310- Case-Study#2?

Need help with my Probability question – I’m studying for my class.

Your  second case study deals representing decision trees with Excel. You  will need to complete the case study project and upload your answers in  an Excel file. We have two modeling problems for you to solve. You  should complete your expected value computations within Excel and  explain your work within your Excel file.

Case 2 Problem 1
Case 2 Problem 2

In  this Case Study, the modeling will take most of your time, and learning  how to represent your answers within Excel should allow you to create a  tool that could allow the variety of parameters and variables to be  adjusted to look at the sensitivity of your solution.

A plant manager is about to commence an urgent above normal production

run. To assure meeting the desired production rate, she has decided to transfer

and incorporate into the production line a piece of equipnient from another

line at a cost of $5000. The manager is considering whether to overhaul this

equipment before placing it in the new production line.
The piece of equipment costs $800 to overhaul, whereas if she incorporates

the item into the process line and it then breaks down it will cost $1500 to cover

the cost of repair and lost time. The manager estimates that there is a 66 percent

chance that the equipment motor is reliable but is assured that it will be reliable

if it is overhauled. A dynamometer test of the motor costs $100 but will only

indicate whether the motor is in good or bad condition with a 10 percent chance

that the test results prove invalid. The manager estimates that there is a 70

percent chance that the dynamometer test will indicate a reliable motor.

(a) Model the decision problem faced by the plant manager.

(b) If the plant manager wishes to base her decision on an EMV policy, what

should be her optimum strategy?

11.2.1 Problem Statement

A contractor working on an outdoor construction project
in a coastal area

is reviewing progress on August l. If normal progress is
maintained and no

time is last due to hurricanes, the job will be completed on August
31. However,

due to the poor weather conditions in the area after August 16,
there will be

only a 40 percent chance of finishing on time. It is estaimated that
there is a

50 percent chance of a minor hurricane, which will cause a delay
of 5 days, and

a 10 percent chance of a major hurricane, which will cause a delay
of 10 days.

It must be decided now whether to start a crash program on August 2
at an addi-

tional cost of $75 per day and finish the project on August 16. As an
alternative,

the normal schedule can be maintained and progress reviewed on
August 31.

At that time if a hurricane has occurred and the project is delayed,
there will be

a choice of accepting the delay at a certain penalty cost or trying to
crash the

program then. The penalty cost for delay of completion will be $400
per day

for the first 5 days and $600 per day for the second 5 days.
The additional cost

of a crash program after the hurricane will be $200 per day. The
total addi-

tional cost is computed as the sum of delay penalty cost and
crash cost.

It is also estimated that the possible results (outcomes)
of a crash program

after a minor hurricane causes a 5-day delay will be as follows:

Crash Program

Result

Save 1 day

Save 2 days

Save 3 days

Probability Total Additional Cost

0.5 $1600 + 800 = $2400

0.3 $1200 + 600 $1800

0.2 $800 + 400 $1200

The possible results of a crash program after a major hurricane
causes a

10-day delay is estimated as follows :

Crash Program
Result
Save 2 days
Save 3 days

Save 4 days

Probability Total Additional Cost

0.7 $(2000 + 1800) + 1600 $5400

0.2 $(2000 + 1200) + 1400 $4600

0.1 $(2000 + 600) + 1200 = $3800