Decision Analysis Study

Topics: Decision theory, Decision tree, Project management Pages: 25 (6839 words) Published: December 10, 2014
﻿Decision Analysis Study

Decision Analysis Study

Introduction

This paper will Be providinG a memo that includes many Tasks related To project planning and operations management. All memos are present accordingly to the separated tasks discussed. We will be using the case study of “Shuzworld”. As the operations consultant for Shuzworld, we will be following all the tasks and then will provide Recommendations by analyzing the problems given in the task prompts. We will also apply the appropriate decision analysis tool to make reliable and valid Recommendations.

Part A

In this task we will be providing whether Shuzworld should build the proposed stand-alone store, the strip mall store, or not proceed with construction, by utilizing the appropriate decision analysis tool. The decision tool we are using for this task is Decision technique analysis.

This technique is used because of its importance. There are two very basic models used for decision analysis - decision tables and decision trees. This module contains a model for a general decision table; a model for entering a decision tree in tabular form; an exciting, new model with a graphical user interface for decision trees; and a model for creating a decision table for demand/supply or one period inventory situations. The decision tree model presented is important it shows the validity of the project. It is easy to understand the reliability and validity of the project.

Other techniques such as short-term scheduling techniques, linear programming, PERT diagrams are important but for this task particularly the decision tree model is more reliable because other techniques are used for determining and evaluating the inventory for the company or the short term projects. As this tasks invlolves Shuzworld new project's projection which is for long term. For this reason we are using Decision tree modeling for this Task 1.

The Decision Table Model

The decision table can be used to find the expected Value, the maximin (minimax) and/or the maximax (minimin) when several decision options are available and there are several scenarios that might occur. Also, the expected Value under certainty, the expected Value of perfect information, and the regret (opportunity Cost can be computed. The general framework for decision tables is given by the number of options (or alternatives) that are available to the decision maker and the number of scenarios (or states of nature) that might occur. In addition, we must choose whether the objective is to maximize profits or to minimize costs.

For each scenario it is possible (but not required) to enter a probability. The expected Value Measures (expected monetary Value, expected Value under certainty, and expected Value of perfect information) require probabilities, while the maximin (minimax) and maximax (minimin) do not.

Scenario 1

Scenario 2

Maximum

Probabilities

0.6

0.4

A (stand-alone option)

700000

-400000

B (strip mall store)

300000

-50000

Perfect Information

700000

-50000

Perfect*probability

420000

-20000

400000

Best Expected Value

260000

Exp Value of Perfect Info

140000

These results shows according to the probabilities set for the projects 'A' and 'B'. This table states that if the project A is implemented then the Shuzworld can make profit of 260,000. This is the gross profit we will subtract \$20,000 From this ...

Memo Providing Recommendations For Shuzworld Business Essay
In order to find out the most cost-effectively decision, Shuzworld is considering the possibility of opening a new store on route 20, just outside of Auburn, referred to as the stand-alone option. The second option is opening a store in the Auburn Mall, and the third is not opening a store at all. To do nothing now, and wait for a better time to move in to the market. Shuzworld is also considering purchasing market research. I recommend that Shuzworld should...

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