Assignment:
Scenario Analysis Guidelines
Knowledge of statistics is important foundational knowledge for analyzing data. Equally important is what you can do with that information. An overarching goal of this course is to consider how statistics informs decision making, or data-based decision making. Throughout this course, you will be asked to make decisions and then to consider the impact of those choices. Whether in stock trading, in car sales, or on the production floor, the decisions you make as a business professional should be directly influenced by the data available to you. Careful analysis is the key to data-based decision making.
Specifically, the following critical elements must be addressed:
I. Main Elements
II. Integration and Application
III. Analysis
IV. Critical Thinking
The owner of a small printing company is considering the purchase of additional printing equipment to expand her business. If the owner expands the business and sales are high, projected profits (minus the cost of the equipment) should be $90,000; if sales are low, projected profits should be $40,000. If the equipment is not purchased, projected profits should be $70,000 if sales are high and $50,000 if sales are low.
1. Are there options other than the purchase of additional equipment that should be considered in making the decision to expand the business?
2. If the owner is optimistic about the company's future sales, should the company expand by purchasing the equipment?
3. Is the owner's optimism or pessimism about sales the only factor that may impact the company's profits?
4. The equipment to be purchased is known in the industry to have a useful life of five years. How might this impact the printing company?
For additional details, please refer to the Scenario Analysis Guidelines and Rubric document in the Assignment Guidelines and Rubrics section of the course.