MGMT 6360 POM Quiz 4
Name_________________________________
1. Magnatree is a large company that has been working on a new product. This product has
tremendous potential, but Magnatree must move quickly. They have decided that they will
introduce the product in two months and have already started developing their advertising
campaign.
They are sure that the product will be a success, with a possibility that it will be a huge success.
They recently found out that another company, Shadycorp, has some unique expertise that could
significantly improve the new product. They contacted them and Shadycorp offered to sell their
expertise to Magnatree for $5 million. Magnatree needs to make an immediate decision on
Shadycorp’s offer or it will be too late to investigate the use of the expertise in design of the new
product. Without the expertise Magnatree has a 20% chance of making the new product a huge
success. With Shadycorp’s expertise there will be a 40% chance of the new product being a huge
success.
If the new product is a huge success, the net present value of its future profits is expected to be
$50 million. If it is merely a success, the net present value of its future profits is expected to be
$20 million.
(a) Construct a decision tree and solve it.
(b) Should Magnatree accept Shadycorp’s offer?
(c) What is the expected value of its future profits from the new product?
2. Aalogistics Co.
has just signed a contract to deliver products to three locations, and they are
trying to decide where to put their new warehouse. The three delivery locations are Chicago,
Kansas City, and Memphis. The x, y coordinates for the delivery locations are as follows:
Location
Chicago
Kansas City
Memphis
x coordinate y coordinate
92
42
85
39
90
35
The total quantity to be delivered to each destination is: 400 to Chicago, 150 to Kansas City, and
100 to Memphis. Calculate the location (x and y coordinates) of the new warehouse using the
Center of Gravity approach.
3. Use the longest task time heuristic, balance the line (assign all tasks).
Cycle time = 1.3 minute
Task and
time
A, 0.2
c
a
e
B, 0.4
d
b
f
h
C, 0.3
g
D, 1.3
E, 0.1
F, 0.8
Work Station
Eligible
Assign
Assigned Time
G, 0.3
Remaining Time
H, 1.2
