Critical thinking Operation Management

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notice: please see my second critical thinking and do the seam feedback dr he give me some mistakes and do the same way in second critical thinking.

NOTE: please  do the critical thinking without plagiarism.

Decision Tree 

The supplement to Chapter 5 in your textbook describes and develops several decision trees.

Address the following requirements:

  • Develop a decision tree for the case described.
  • Explain the process of developing a decision tree, draw the decision tree (include the decision tree in an appendix showing chance nodes, probabilities, outcomes, expected values, and net expected value).
  • Defend your final decision based on your decision tree.

 Case for consideration—An operations manager for a cereal producer is faced with a choice of:

 

  1. A large-scale investment (A) to purchase a new cooker which could produce a substantial pay-off in terms of increased revenue net of costs but requires an investment of 3,750,000 Saudi Riyal. After extensive market research it is thought that there is a 40% chance that a pay-off of 9,375,000 Saudi Riyal will be realized, but there is a 60% chance that it will be only 3,000,000 Saudi Riyal.
  2. A smaller scale project (B) to refurbish an existing cooker. At 1,875,000 Saudi Riyal, this option is less costly but produces a lower pay-off. Again, extensive research data suggests a 30% chance of a gain of 3,750,000 Saudi Riyal but a 70% chance of it being only 1,875,000 Saudi Riyal.
  3. Continuing the present operation without change (C) which cost nothing, but produces no pay-off.
  • Embed course material concepts, principles, and theories, which require supporting citations along with at least two scholarly peer reviewed references supporting your answer.
    • Support your submission with course material concepts, principles, and theories from the textbook and at least three scholarly, peer-reviewed journal articles.

 

 

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