Hrm 531 Week 4 Paper
In this paper, we will be looking at three different scenarios in order to understand and implement different decision models.
Question one The Gorman manufacturing company is trying to decide whether to manufacture a component part or to purchase it. In order to make this decision we need to calculate the Expected Monetary Value for each probability. The highest EMV will be the best decision (Satyaprasad, Nirmala, & Saha, 2012). So, EMV for manufacture is= -20(.35) + 40(.35) + 100(.30) = -7+ 14+ 30 = 37. EMV for purchase is= 10(.35) + 45(.35) + 70(0.30) = 3.5 + 15.75 + 21 = 40.25. So, the expected monetary value for purchase option is higher that the manufacture option. So, purchasing the component part will be the best decision. To calculate the legitimacy of the decision we …show more content…
= $15,000,000 - $8,000,000 - $ 5,000,000 = $2,000,000
Payoff two = Expense of forfeiting the bid = ($5,000,000 x 10) / 100 = $5,00,000.
Payoff three = 0
Payoff Four = 0
Payoff Five = 0 If the market research information is not available, mountain view corporation should not submit a $5,000,000 bid, because if the corporation decides to submit the bid without any market information then they go into a $100,000 loss. So, it is in the company’s best interest not to submit a bid without any research information regarding the market. On the other hand, if market research information is available to the corporation, and if the voters approve the zoning change, then mountain view has to submit a $5,000,000 bid and expect an EMV of $245,000. But, if the voters don not approve of the zoning change, then the company should not submit the bid, because if they submit the bid and obtain the property but fail to complete the purchase, then it will face a loss of $145,000. Mountain view corporation should only the market research firm, if market research value is greater than the cost of performing the market research
Question one The Gorman manufacturing company is trying to decide whether to manufacture a component part or to purchase it. In order to make this decision we need to calculate the Expected Monetary Value for each probability. The highest EMV will be the best decision (Satyaprasad, Nirmala, & Saha, 2012). So, EMV for manufacture is= -20(.35) + 40(.35) + 100(.30) = -7+ 14+ 30 = 37. EMV for purchase is= 10(.35) + 45(.35) + 70(0.30) = 3.5 + 15.75 + 21 = 40.25. So, the expected monetary value for purchase option is higher that the manufacture option. So, purchasing the component part will be the best decision. To calculate the legitimacy of the decision we …show more content…
= $15,000,000 - $8,000,000 - $ 5,000,000 = $2,000,000
Payoff two = Expense of forfeiting the bid = ($5,000,000 x 10) / 100 = $5,00,000.
Payoff three = 0
Payoff Four = 0
Payoff Five = 0 If the market research information is not available, mountain view corporation should not submit a $5,000,000 bid, because if the corporation decides to submit the bid without any market information then they go into a $100,000 loss. So, it is in the company’s best interest not to submit a bid without any research information regarding the market. On the other hand, if market research information is available to the corporation, and if the voters approve the zoning change, then mountain view has to submit a $5,000,000 bid and expect an EMV of $245,000. But, if the voters don not approve of the zoning change, then the company should not submit the bid, because if they submit the bid and obtain the property but fail to complete the purchase, then it will face a loss of $145,000. Mountain view corporation should only the market research firm, if market research value is greater than the cost of performing the market research