Smart Steering Support

Topics: Decision theory, Marketing, Input/output Pages: 24 (4248 words) Published: June 4, 2013
Final Report

Smart Steering Support

Prepared By:

Nipun Lavoie

February 24, 2011

Industrial Engineering 417: Operations Research II

TABLE OF CONTENTS

1. Problem Statement ……………………………………….3 - 7 2. Assumptions ……………………………………………...8

3. Definitions ………………………………………..............9

4. Decision Tree (Manual)…………………………………..10

5. Decision Tree (WinQSB)………………………………...11

6. Decision Tree Analysis …………………………………..12

7. Explanation of Decision Tree…………………………….13

8. Sensitivity Analysis - Probability of Research Success …14

9. Sensitivity analysis - Selling price of DSS……………....15

10. Utility Decision Tree………………………………….....16

11. Decision Tree Analysis for Utility…………………….....17

12. Utility Graph ………………………………………….....18

13. EPVI……………………………………………………..19-20

14. Report to Manager ………………………………………21-23

15. APPENDICIES

i. First Report, Input/Output Screen shots

ii. Details and input/output for Sensitivity Analysis of Probability

iii. Details and input/output for Sensitivity Analysis of Selling Price

iv. Details and input/output for using utility function

v. Unexpected Problem

PROBLEM STATEMENT

On a sunny May morning, Marc Binton, CEO of Bay Area Automobile Gadgets (BAAG), enters the conference room on the 40th floor of the Gates building in San Francisco, where BAAG’s offices are located. The other executive officers of the company have already gathered. The meeting has only one item on its agenda: planning a research and development project to develop a new driver support system (DSS). Brian Huang, Manager of Research and Development, is walking around nervously. He has to inform the group about the R&D strategy he has developed for the DSS. Marc has identified DSS as the strategic new product for the company. Julie Aker, Vice President of Marketing, will speak after Brian. She will give detailed information about the target segment, expected sales, and marketing costs associated with the introduction of the DSS.

BAAG builds electronic non-audio equipment for luxury cars. Founded by a group of Stanford graduates, the company sold its first product—a car routing system relying on a technology called global positioning satellites (GPS)—a few years ago. Such routing systems help drivers to find directions to their desired destinations using satellites to determine the exact position of the car. To keep up with technology and to meet the wishes of their customers, the company has added a number of new features to its router during the last few years. The DSS will be a completely new product, incorporating recent developments in GPS as well as voice recognition and display technologies. Marc strongly supports this product, as it will give BAAG a competitive advantage over its Asian and European competitors.

Driver support systems have been a field of intense research for more than a decade. These systems provide the driver with a wide range of information, such as directions, road conditions, traffic updates, etc. The information exchange can take place verbally or via projection of text onto the windscreen. Other features help the driver avoid obstacles that have been identified by cars ahead on the road (these cars transmit the information to the following vehicles). Marc wants to incorporate all these features and other technologies into one support system that would then be sold to BAAG’s customers in the automobile industry.

After all the attendees have taken their seats, Brian starts his presentation: “Marc asked me to inform you about our efforts with the driver support system, particularly the road scanning device. We have reached a stage where we basically have to make a go or no-go decision concerning the research for this device, which, as you all know by now, is a key feature in the DSS. We have already...
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